With Los Angeles facing a $529-million budget deficit, Mayor Antonio Villaraigosa on Tuesday urged the City Council to declare a fiscal emergency that would grant him the authority to lay off and furlough thousands of city workers.
The request signals a more hard-line tack by the mayor to win salary and benefit concessions from the city's public employee unions, which had soured on Villaraigosa's call for a salary freeze, furloughs and increased benefit costs to save $230 million and avert the need for layoffs.
Villaraigosa said the worsening economy and an expected $300-million drop in city tax revenue gave him "very few options." L.A.'s budget gap is expected to grow to $1 billion in the 2010-2011 fiscal year because of investment losses in the city's pension systems, which the city is required to keep solvent.
"The gravity of the fiscal emergency that we face is enormous," Villaraigosa said in his letter to the council. "Unless we act with urgency, the city will face a cash flow crisis, raising the prospect of running out of cash between November and February."
The council is expected to consider the mayor's request later this week.
Barbara Maynard of the Coalition of L.A. City Unions, which represents 22,000 civilian employees, said the unions and the mayor's office had been negotiating a major early retirement program that would have taken more than 2,000 city workers off the payroll and allowed the city to avoid mass layoffs. Early retirement would have been offered to workers within five years of eligibility.
The mayor "abruptly abandoned" the discussions last week, the coalition said in a statement released Tuesday. Villaraigosa said the package was not "fiscally sustainable" and would have added an enormous financial burden to the city's already underfunded pension system.
Union officials dispute that, saying that they had agreed to pay higher premiums to cover the additional pension costs. They said the mayor's office helped draft the retirement proposal only to later renege.
In his letter, the mayor said the city should commence layoffs of 1,000 city employees beginning in July if union concessions cannot be negotiated. He also warned that thousands more could be laid off during the upcoming fiscal year, although police officers and firefighters, as well as workers who provide essential services such as trash collection, would be exempt from the cuts.
The mayor said that if the council agrees to declare a fiscal emergency, he intends to implement work furloughs within 30 days. He said he has invited a labor representative to discuss the effect of the plan, which would require up to 26 furlough days for civilian city employees next fiscal year.
He said he would also be working with the City Council and labor officials to develop a buyout program to permanently reduce the city's civilian workforce.
"This is a very serious crisis, bigger than we've ever experienced as a city. There's no place for mirrors and smoke or game playing," said Councilman Bill Rosendahl. "The mayor's letter is very clear: This is a fiscal emergency. We need to take a deep breath and realize, if we don't act we're going to have to lay off a good number of the workforce, which is to me insane."
The council is required to approve a balanced budget before July 1.
Times staff writer Maeve Reston contributed to this report.