Fiscal Crisis

Two days after announcing a $1.8-billion anti-crime plan, Mayor David N. Dinkins on Thursday ordered a hiring and promotion freeze and directed budget aides to draft a plan to lay off 15,000 city employees. If enacted, the layoffs would be the biggest since the fiscal crisis of 1975, when the city hovered near bankruptcy and about 25,000 employees were let go. The police hiring plan, which calls for adding nearly 8,000 officers to the force, would be exempt from the cutbacks.

It is budget time in America. And once again, governors, mayors, state legislators and city council members are cutting. This year, they are beyond fat, beyond muscle, heading deep into bone. Despite the threat of terrorism, we have laid off police officers and firefighters. School districts have dismissed teachers. States have released felons. Millions of poor people have lost their health insurance. Yet the economy is growing rapidly and tax revenues have bounced back in predictable fashion.

As Los Angeles Unified School District officials struggle to come to grips with the sudden resignation of Supt. Bill Anton, the immediate task ahead will be the selection of a successor--a process some say could be as wrenching as the events that led to his decision to step down. School board President Leticia Quezada said Tuesday the board expects by the end of this week to appoint an interim superintendent to replace Anton when he leaves Sept. 30.

Gov. Arnold Schwarzenegger said Wednesday that the claim by some conservative activists that illegal immigration is to blame for all of the state's fiscal problems is ignorant and bigoted. The governor made his comments during a public forum at The Times building in downtown Los Angeles, where he expressed frustration with anti-tax organizations and others seeking to derail a package of ballot measures that will come before voters in a May 19 special election.

With a theatrical burst of one-upmanship, two prominent candidates for mayor Wednesday sought to promote rival plans for bailing Los Angeles out of its worst fiscal crisis ever. Up to now, most of the candidates have resolutely avoided any discussion of what they would do about the looming $500-million municipal deficit--an amount roughly equal to one-quarter of the city's general fund.

Mayor Antonio Villaraigosa and the City Council have a double task ahead of them. They must confront a serious cash-flow problem and take decisive, sober action to ensure that the city will have the money to pay its bills over the next 18 months. At the same time, they must identify the city's mission for the coming decade and redesign its government into a lean, efficient operation dedicated to that mission and nothing else. Time is short. Lower revenue projections mean City Hall may have to dip $50-million deeper into its emergency funds to get through the fiscal year that ends June 30, leaving the city with insufficient funds to meet new contingencies or to assure lenders that it will meet its obligations.

Medicaid cuts imposed by every statehouse have slowed the growth in spending on the health-care program for the poor and disabled for the first time in six years, a panel announced Monday. The Kaiser Commission on Medicaid and the Uninsured, a health-care think tank, released three reports showing how the states' fiscal crisis is limiting health coverage for the poor.

Since taking charge as public schools chancellor here 18 months ago, Joseph A. Fernandez has dazzled New Yorkers with an astounding string of accomplishments. But as New York grapples with its most severe financial crisis since nearly going bankrupt in the mid-1970s, Fernandez's momentum is in danger of being severely arrested, if not reversed.

Close your eyes in Washington these days and you can almost hear the echoes of 1932. Eighty years ago, just like today, a fiscal crisis almost totally dominated the nation's capital. Then, as now, fiscal conservatives demanded immediate action to fix a federal budget awash in red ink. And then, as now, average Americans wondered why all the fuss about deficits. The Depression was in its third year, and millions had no jobs. Why were politicians haggling about balancing the budget?

In 21 years as a superintendent, I have never encountered cuts of the magnitude that the fiscal crisis in California will force us to make in San Diego city schools next year. Even with anticipated enrollment increases of 1,500 to 2,000 students and no cost-of-living salary increases for any employees, we still must cut $37 million--or 7%--to balance the budget.