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L.A.'s fiscal black hole

Revenues are worse than expected, putting an early retirement plan in danger. It's time to consider layoffs and other drastic actions.

September 14, 2009

City Controller Wendy Greuel reported last month that Los Angeles, if it stays on its present course of spending and anticipated revenue, will run out of money next May. City Administrative Officer Miguel Santana reported Friday that revenues have declined even further than expected since the 2009-2010 budget was adopted. In short, the city must drastically change direction. An early-retirement program for city workers, perhaps viable at the time it was proposed, no longer appears affordable.

The City Council's budget committee today, and the full council Tuesday, will revisit the program, which the city has neither ratified nor implemented. As they do, council members should keep several things in mind. First, their own dawdling has exacerbated the city's financial problems. With no decision made yet to adopt or scrap early retirement, or to move immediately to a more drastic targeted layoff process, no savings have been recouped. Any decision will be more painful now than it would have been a month ago. The point is not to scold the council for past foot-dragging but to emphasize that further delay would be even more destructive.

What matters now is whether, given financial conditions, the city is better off with the plan or without it. Given a recommendation from Santana to drop early retirement, the burden is squarely on plan supporters to demonstrate that it would still work.

Nor will any option be risk-free. A coalition of city unions may sue if early retirement doesn't move forward. Another union may sue if it does. But no amount of further fact-gathering can outline every possible risk. Time has run out; the council must make a decision and stick with it.

The council must also recognize that early retirement is simply a threshold issue. With it or without it, City Hall most likely will have to lay off a significant number of city employees. That will hurt more than the employees and their families, and more than the union support that council members court. It will hurt city services and city residents. There is no longer any choice.

And perhaps most important: This week's decision on staffing will resolve few problems unless it comes in the context of a broader discussion about the city's priorities and how they must be addressed in the continuing economic situation. Both Mayor Antonio Villaraigosa and the City Council have made public safety Los Angeles' top priority, and it's the right move. But with revenue dropping in the foreseeable future, city leaders must be honest about the necessary trade-offs. City Hall cannot be all things to all people. Some programs, some departments, most likely will have to go. It's up to city leaders to decide which ones.

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