Los Angeles Mayor Antonio Villaraigosa offered a bleak financial forecast for city government over the next two years on Saturday, warning that deep cuts to services and other belt-tightening measures would be unavoidable because of the worsening economic downturn.
Villaraigosa said the city's budget shortfall could exceed $400 million next year, far worse than expected. That could lead to workforce reductions and have a significant effect when the city negotiates new labor contracts with police and firefighters.
The mayor's call for fiscal restraint came at his annual Community Budget Day with the city's neighborhood councils at City Hall. Only six months before, he had made a similar commitment to make "deep and painful cuts" when the city faced a $406-million budget shortfall. At that time, Villaraigosa proposed eliminating 767 city jobs and requiring mandatory work furloughs to close the gap and still fulfill his pledge to hire more police officers.
However, the city's financial picture remains as precarious as ever as Villaraigosa's first four-year term draws to a close, with the mayor and the City Council continuing to rely on short-term fixes to help address the city's knack for spending more than it collects in taxes and fees.
In spring, the city closed a budget gap on its $7-billion spending plan by increasing taxpayer fees by $90 million and unearthing one-time pots of money. Among other things, the city sold surplus property and tapped $18.25 million in unused healthcare funds offered up by city employee unions.
But those fixes will do little to help next fiscal year. City general fund revenues are expected to drop by at least $41 million, while expenses are to rise by $240 million -- driven primarily by increases in employee pay and benefits as well as police hires, according to city budget experts.
Villaraigosa says he has taken major steps to reform the budget process and has found ways to responsibly pay for his spending priorities and the city's core missions, No. 1 of which is hiring 1,000 police officers.
"Public safety is our top priority, and growing that Police Department is critical to it," Villaraigosa said. "The city is safer. . . . There are more tourists in the city, more businesses in the city; we see more construction in the city. If this was a city plagued by crime, you wouldn't see that."
