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Villaraigosa backs off on proposed furloughs

City revenues are up more than expected, so L.A. 'might not be out of cash after all,' the mayor says. His plan for two furlough days a week was expected to spark a protracted fight.

April 09, 2010|By Maeve Reston

Los Angeles Mayor Antonio Villaraigosa has backed away from his call to shut down some city departments two days a week, using positive news about the city's budget crisis to downplay a threat that had become increasingly difficult to sustain.

"To all of our surprise, we've gotten an increase in revenues of $30 million more from property tax than we expected," Villaraigosa said Thursday, two days after announcing the move might be necessary as soon as Monday to prevent the city from running out of money.

With the unexpected revenue and the City Council's budget-balancing moves, "We might not be out of cash after all," the mayor said.

Most council members viewed the mayor's proposal for two furlough days a week as a remote possibility because it was likely to spark a protracted fight with labor leaders and council members.

"It's not even the two-day thing. He can't furlough employees without the concurrence of the council," Councilwoman Jan Perry said. "Our chief legislative analyst made clear that that was not an action that could be taken unilaterally."

Council President Eric Garcetti said recent moves to close the city's $212-million budget gap could rebuild reserves to nearly $40 million by the end of the fiscal year, even without the council persuading the Department of Water and Power board to follow through on transferring a promised $73.5 million into the city treasury.

"There's no scenario, unless something catastrophic happens, where we are going to be in the red," Garcetti said, adding that the city still needed the transfer.

Acting City Administrative Officer Ray Ciranna said a detailed report on the city's financial outlook slated for release Friday would show that "things are not as dire as once anticipated."

"We are still in a budget crisis, but we will end the year paying all of our bills," he said.

Still, Villaraigosa said he and council members agreed that the city needed a backup plan "in the event that these assumptions don't bear out and we are, in fact, out of cash."

The mayor rolled out his contingency plan for two-day-a-week furloughs on Tuesday after the DWP's interim general manager said the utility could not afford to send the money because the council had rejected plans for an electricity rate hike.

The plan for imposing the shutdown moved so quickly that Margaret Whelan, general manager of the Personnel Department, found out about the concept by reading a news release sent out by Villaraigosa's office. Since then, she said, her office has fielded dozens of calls from worried workers.

"They're already furloughed, and the idea of an additional furlough of this nature is really frightening to them," she said.

After a heated week in which charges flew between the mayor and the council, Villaraigosa met for two hours behind closed doors with council leaders for a discussion that he described as "very productive."

The mayor said he would continue to ask the DWP board to transfer at least $20 million to the city. Although he favors a rate increase of 0.8 of a cent per kilowatt hour of electricity consumed, he said any hike should provide the utility with "a long-term revenue stream" to cover its bills and pay for renewable energy and conservation initiatives.

The council had approved a rate hike of 0.6 of a cent per kilowatt hour and rejected the DWP board's counterproposal of 0.7 of a cent per kilowatt hour.

Although several council members said they were working behind the scenes to reaffirm the majority of the council's commitment to the more modest increase, there were no clear signs of an agreement Thursday.

Several council members said they feared the stalemate continues to threaten the city's bond rating.

Councilman Richard Alarcon said he believed the majority of council members wanted to see a "reasonable rate increase" but that a few members had used "confusion" and parliamentary maneuvers to block a compromise.

"What we need is for the leaders on the council as a whole to step forward and make this thing happen," Alarcon said.

"The reality is we need to cut a deal here."

maeve.reston@latimes.com

Times staff writer David Zahniser contributed to this report.

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