Frank Stoltze
May 26, 2009
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The Los Angeles City Council on Wednesday is expected to approve a budget for the fiscal year that starts July 1. The $7 billion spending plan includes hundreds of layoffs and deep cuts in services to address a budget deficit of $520 million that was brought on by the foreclosure crisis and recession. The budget picture could worsen, as KPCC's Frank Stoltze reports.
Frank Stoltze: Few know L.A.'s budget better than Bernard Parks. The former police chief turned councilman heads the city council's budget and finance committee.
Bernard Parks: The issues are so enormous and they're so urgent that I don't believe people have gotten their arms around it, because every day we delay costs, money, and positions down the road.
Stoltze: The tall, lanky Parks stands in a narrow hallway behind council chambers. He and his colleagues already have approved eliminating 1,200 city jobs that currently are vacant, and tentatively OK'd laying off 1,200 of the city's 50,000 or so employees. Parks says the layoffs are likely to grow as the city grapples with its biggest budget deficit ever.
Parks: The best case, you could be in the neighborhood of two- to three-thousand, the worst case, it could get to seven- to eight-thousand.
Stoltze: The number, says Parks, depends on the outcome of negotiations with the city's labor unions. The mayor's pushing city workers to give up pay raises, agree to unpaid furlough days, and contribute more to their pension funds to save more than $200 million and avoid massive layoffs.
Parks: None of those discussions have produced real money. There's a lot of discussions, there's talk of early retirement, but until they produce a final outcome, this $200 million is money that doesn't exist.
Stoltze: Then there's Governor Schwarzenegger's plan to withhold money from local governments to address the state's gaping budget hole.
Parks: We have already been subject to about $100 million in funds that have not been forthcoming. The governor has said that, after the election, probably it will be in the range of another $120 million just in property tax.
Stoltze: California would be required to repay local governments. In the meantime, Parks says L.A. would likely have to borrow money. But that's getting more expensive too.
Parks: The bond companies put us on a watch list, which is the first step before they drop your rating. If our debt keeps going up, our liabilities in the pension keep going up, our revenues keep dropping, if we don't show a substantial change in the way we're doing business, then the bond company could take on a tact of reducing our bond rating.
Stoltze: In the end, Parks warns Angelinos to expect less from the city.
Parks: The services that they've taken for granted – street paving, sidewalk repair, tree trimming, lights on their street, the response of city resources – those are going to be diminished significantly.
I think people really have to mentally prepare themselves to understand that the city as they knew it in the last several years is not going to be the city that will serve them in the future.
Stoltze: It's something city and county officials across the Southland are saying as the full force of the foreclosure crisis and recession hit local governments.
