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Apr 2009
L.A. Faces Financial Judgment Day

In the hyperbole of local politics, this is the year the Titanic hits the iceberg.

After a year of constant adjustments to the $7.2 billion spending plan, Mayor Antonio Villaraigosa today is set to release his 2009-10 budget - one that is expected to require thousands of layoffs, cuts in nearly all departments and higher fees for residents.

Mayoral spokesman Matt Szabo said the budget will reflect the difficult choices facing policy makers. "The mayor has said it: It is all about shared sacrifices," Szabo said. Los Angeles is not alone, of course, in facing the need for those sacrifices. Many local governments and the state of California are bleeding red ink in the weak economy as they face lowered expectations for revenue and local jobs. "All of local government is facing major problems," said Jack Kyser, chief economist for the Los Angeles Economic Development Corp., who advises cities on revenue projections.

"They have to be prepared for poor performances in all their major sources of revenue - retail sales, hotel, property. And, it will be with them for up to four years. The economy is still soft and, when it comes back, it is going to be slow growth."

Villaraigosa's budget will need to deal with a projected $530 million shortfall. The Mayor's Office declined to release details of the budget early. But City Hall sources familiar with the spending plan describe it as a "what if" budget based on uncertain projections over revenues, employee givebacks and a continuing weak economy.

It is said to be based on three core issues: Eliminating up to 1,300 positions in the budget - although most are vacant; a public-private partnership involving the management of city-owned parking lots, and convincing the unions to help look for solutions.

The one area where Villaraigosa, so far, is refusing to budge on new spending is his police hiring plan to get to 10,000 officers - and for which taxpayers saw a trash fee imposed that now is $36 a month. The LAPD now stands at 9,867 officers and the mayor is looking to hire more than 700 this year, which would get the department over the 10,000 mark including expected retirements and resignations.

"The mayor is adamant about this," Szabo said. "He absolutely believes now is the wrong time to slow police hiring. He believes he has made a promise to get to 10,000 on the city's dime and he will do that. If the council tries to slow it down, he will oppose them."

But there is increasing sentiment among City Council members to slow down the hiring plan - even among those who have been among the LAPD's biggest boosters. "Police and fire will always be No. 1 with me," said Councilman Greig Smith, who serves on the Budget and Finance Committee and also is a reserve officer.

"But when we are looking at laying off thousands at a time we are hiring new cops, you have to question what we are doing. The crime rate is way down and things are working well. I say maybe it's time to have a timeout or a pause in hiring for a couple of years."

Others familiar with the proposed budget say the mayor is considering an order to departments to make cuts in the range of 10 percent, without specifying which programs will be affected.

"What you could be looking at is the Planning Department cutting out all community plans," said one high-ranking city official, who asked not to be identified because the mayor has not yet released the budget. "Recreation and Parks will have to consolidate its centers. All the departments will have to make cuts at the programs that have the lowest priority. And the public will notice. It will be a lot of popular programs."

Also contained in the budget is uncertainty over revenues. Smith, who is part of a group of officials that meet with the Mayor's Office over budget issues, said it also includes projections on revenues and savings that are still being negotiated - such as the mayor's call for "shared sacrifice" with city unions to accept a suspension of cost-of-living increases and work furloughs.

"Those are still to be negotiated and I don't know if we can count on the revenue," Smith said.

The Los Angeles Police Protective League, which is in negotiations for a new contract this year, has suggested a partial slowdown in the hiring.

"What we have suggested is rather than have classes of 57 officers, it be cut to 40," PPL president Paul Weber said. "That would keep us on track to hire the officers and save the city $21 million this year."

Councilman Bernard Parks, who chairs the Budget and Finance Committee and is considered a budget hawk, has said the programs will need to be in effect on July 1 to get their full impact.

"The longer we wait, the more cuts we will have to make later," he said. Villaraigosa has warned the city is facing the layoff of up to 2,800 of its more than 40,000 member work force and he has called on the unions to return to the bargaining table to discuss his proposals which include working for free one hour a week, forgoing automatic increases and a hike in contributions to the pension system.

Weber said the police union is willing to talk over all the different issues, except for the notion of furloughs. "The mayor made clear to us he is not looking to furlough police officers," Weber said. "We need officers on the street and we were told that is one thing that will not be on the table."

Weber said he has also offered to help the city in other areas, such as streamlining procedures to make it easier to bring business to Los Angeles and working with city officials in a coordinated approach to get more state and federal money to the city.

Pat McOsker, head of United Firefighters of Los Angeles City, also has said his union is willing to discuss all the issues during its negotiations for a new contract. Bob Schonover of Service Employees International Union Local 721, which signed a five-year contract last year, said his members are open to discussing options with the city.

"We want to find our way through this, like the city does," Schonover said. "We are looking to find savings without affecting service to the public." However, Schonover said he believes the city should explore other options - such as early retirement - before it asks workers to give up any benefits and salary negotiated in the past.

"We have seen this done in other jurisdictions and they actually got more than they had expected," Schonover said. "We believe we would find the same here in the city."

Kyser said it will be interesting to see if the mayor is able to convince the unions to give any concessions.

"Historically, unions are more willing to see layoffs than have any givebacks," Kyser said. "If you're a union president, you have to appeal to the members you have, not those who have left.

"And, with unions, once you give them something, it is impossible to get them to give it back."



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