SAN FRANCISCO - Los Angeles Mayor Antonio Villaraigosa proposed a $4.5 billion fiscal 2009 general fund budget Monday that closes a projected $406 million gap in the current-services budget with short-term layoffs, job cuts, fee hikes, and one-time transfers from the city's parking fund.
The city's capital improvement budget would grow 4.9% to $292.3 million. The city plans to issue $290 million of long-term debt, including $111 million of general obligation bonds. Los Angeles would cut its short-term borrowing to $423 million from $699 million. Debt service costs would increase to 8.7% of revenues from 8.5%.
General fund spending would increase 0.8%. Including special funds - such as sewer construction, solid waste, debt service and street paving - the overall budget would expand 2.8% to $7 billion. That does not include proprietary departments like the airport, harbor and municipal utility, which have their own budgets that total more than $10 billion.
"Our imagination will be tested in this tough budget year," Villaraigosa said in his budget statement. "We face mounting foreclosures, rising unemployment, declining revenues and an estimated general fund deficit of $406 million."
The second-largest U.S. city faces service cuts and fee hikes because a slowing economy and weak housing market are cutting into tax collections. Documentary transfer tax revenues - which include property transfer taxes - are forecast to fall 24% to $120 million.
Among the city's biggest revenue sources, property tax collections will rise 2.6% to $1.4 billion and utility user taxes will increase 1.7% to $638 million. Business taxes will fall 1.5% to $470 million and sales tax receipts will drop 3.7% to $336 million.
Under Villaraigosa's plan, the city would make up part of the revenue shortfall with higher fees. He proposed a $91 million increase in fees, mostly in the form of higher parking fines and fees and trash collection fees. All told, fee, fine, permits and license revenues would jump 23% to $763 million.
The mayor proposed $140 million of cost cuts, including $23 million from temporary staff layoffs, $61 million in staff or salary cuts and $56 million in contracts and equipment. He would cut the authorized city payroll, not including the proprietary departments, by 254 employees to 36,894.
For the first time since fiscal 2000, the city would not use its rainy-day fund to balance the budget and would add $23 million to the fund to bring the balance to $192 million, or 4.3% of the general fund. Villaraigosa also plans to reduce short-term borrowing and to pay pension costs earlier in the year to help reduce interest costs and to increase earnings in the pension funds.
The City Council must now act on the budget, which would go into effect July 1.
Los Angeles' general obligation bond rating is AA from Standard & Poor's and Fitch Ratings and Aa2 from Moody's Investors Service. Those are the highest ratings among the nation's cities with more than two million people.
