City official warns of 'black clouds' in budget

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Revenue outlook - black clouds

(AP image)

LOS ANGELES (CNS) – The city’s top budget adviser urged the City Council today to follow through and move quickly on a pledge to eliminate 209 city jobs in the face of a $16.6 million shortfall just four months into the fiscal year.

The council approved the layoffs in the spring as part of the city’s budget plan, but delayed actually firing workers until January. All but 23 of those 209 jobs — in the Animal Services, Information Technology, Fire, Police and Personnel departments — are currently occupied.

In his first financial status report of the fiscal year that started in July, City Administrative Officer Miguel Santana warned of “major black clouds” in the city’s revenue outlook for the year, including nearly $38 million the city is counting on but has not yet received.   Spending by the Fire, Police, City Attorney and General Services departments accounted for the $16.6 million deficit tallied in the report.

Santana detailed the deficits mounting even before a $216 million anticipated budget shortfall kicks in on July 1 and a $327 million deficit in 2014.   He cautioned against tapping the city’s reserve fund to help close the short- term deficits. Such a move would be seen by credit rating agencies as the city “backpedaling” on its commitment to stabilize its finances, Santana wrote.

Earlier this month, Moody’s downgraded one of the city’s bonds and warned of more downgrades if a weak economy and revenue shortfalls persist.    The CAO’s 101-page report warned of other looming financial risks to the budget, including a class-action lawsuit against the city over telephone user taxes, potentially worth hundreds of millions of dollars; rising costs from a new workers’ compensation law; and a potential phase-out of the city’s gross receipts tax on businesses, which currently generates more than $400 million in annual revenue for city services.

Addressing an ongoing dispute over furloughs imposed on deputy city attorneys, Santana called for ending the furloughs and instead laying off 50 attorneys in the City Attorney’s Office Criminal/Special Litigation unit. A union for the deputy attorneys sued the city over the furloughs.

Chief Deputy City Attorney William Carter called the recommendation an “outrageous and short-sighted attack on the public health and safety of the city’s residents.”

“When you cut criminal prosecutors, including those who prosecute sexual assaults, DUIs, environmental crimes and code enforcement violations, you impact public safety,” Carter said. “If there are no criminal prosecutors, LAPD’s arresting of criminals will be for naught. The City Council should not tolerate such an attack.”

Santana’s call for layoffs wasn’t the only threat to City Attorney Carmen Trutanich’s office today. In his own budget memo released late Monday, Mayor Antonio Villaraigosa called for studying a plan, among other cash-saving options, to strip the City Attorney’s Office of its responsibility for civil cases and instead appoint an attorney to advise the City Council and mayor on civil issues.

Trutanich blasted the mayor for what he called “a distressing lack of imagination” on how to solve the city’s problems, saying it would be three times more expensive to hire outside attorneys.

“The proposal is another misguided attempt to disrupt the necessary legal checks and balances provided by an independent city attorney, elected by and accountable to the voters, against any excesses by the mayor or City Council,” Trutanich said in a statement. He added that the cities of Bell and Vernon, which have both been accused of rampant corruption, had appointed city attorneys.

In his budget memo, Villaraigosa also called for Santana to study plans to reduce starting salaries for civilian city workers, to lower scheduled raises for current city workers and to eliminate non-federal paid holidays, among more than a dozen other cost-saving proposals.

The City Council’s Budget and Finance Committee chairman, Paul Krekorian, called the day’s budget news “sobering.”

“In closing the deficits for next year and the year following, there simply are no easy solutions on the horizon,” Krekorian said. “As painful as all of the options may be, I look forward to working with the mayor to consider a broad range of potential solutions to put the city’s fiscal house in order. Inevitably, all of these solutions will be unpopular with someone, and some may be unpopular with just about everyone.”

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