LOS ANGELES — Los Angeles will be borrowing, but there won’t be much new money for new projects in the near future.
Chief administrative officer Miguel Santana told investors Thursday that the city has put away its credit card.
Santana’s remarks were made during a presentation at the city’s first-ever investors conference at L.A. Live’s Grammy Museum in downtown Los Angeles.
The trend toward refunding as opposed to issuing new money is evidenced by refinancing deals scheduled for April on $340 million of general obligation bonds and $228 million in Municipal Improvement Corporation of Los Angeles debt.
MICLA is a nonprofit financing corporation used to finance capital projects and equipment. Los Angeles had outstanding MICLA notes of $224 million as of March 1.
Those two refundings will be followed by a series of refinancings planned for this summer on bonds for the city’s wastewater system.
Like many cities, Los Angeles, the nation’s second most populous, can’t afford to take on new debt with the economy growing so slowly, said Natalie Brill, the city’s chief of debt management.
City leaders also anticipate additional austerity measures this year, including layoffs, to whittle down a projected $220 million deficit for fiscal 2012.
In order to deal with what Santana described as a “structural deficit,” created because the government’s expenses are growing faster than its revenues, he said city leaders are also going to have to look at raising taxes next year. The earliest the city could go to voters with a tax increase is March 2013.
More concessions are also going to be expected from city employees — including the likelihood that employees will no longer be able to retire at age 55, Mayor Antonio Villaraigosa said in a speech.
“We are going to change the retirement age for new employees,” the mayor said. “It will be something more reasonable than 55. I think that number is going to be 67.”
Villaraigosa also said Los Angeles will likely have to lay people off, but said he wasn’t going to provide an estimate of job losses at this point.
The mayor is nearing the end of his second term. Term limits prevent him from running again in 2013.
Officials don’t want to lay off more employees, but as part of last year’s negotiations the unions would only agree to concessions if the city eliminated furlough days.
“Without the ability to furlough employees, we might have no choice but to lay people off if the unions won’t come back to the table,” Brill said.
Put simply, Santana said, the economy is not growing fast enough and Los Angeles’ expenses are growing faster than its revenues.
City leaders did not set the wheels in motion to raise taxes this year because “people are still hurting and still recovering from the recession,” Santana said. “Raising taxes will be the last option after we have done everything else we could do.”
Referring to proposed layoffs and the possibility of raising taxes next year, Councilman Herb Wesson said in an interview that everything is on the table right now to solve the budget crisis.
Wesson told investors during a speech not to be frightened away from investing in the city’s bonds because of what they read in the newspapers during the upcoming budget process. The mayor is due to deliver his budget to the City Council on April 20.
“If our future was not bright investors would not have agreed to invest $2 billion in the Los Angeles Dodgers a few days ago,” Wesson said. “Regardless of what you hear, we will lead Los Angeles out of this financial darkness and into the financial light.”