L.A. City has other problems too
Mayor Antonio Villaraigosa
L.A’s Fiscal Crisis
According to news reports the city is running out of money fast, and the Mayor and the City Council do not have an immediate plan to address the city’s financial woes
By Yussuf J. Simmonds
What will the city leaders do when there are no more funds available to operate the basic functions of the city? The talk of massive lay-offs and drastic cuts in city services is enough to create panic in the streets as never seen, imagine or experienced before.
According to an official statement from the Mayor’s office, in seeking ways to address the current financial crisis and to balance the budget, he has asked the city administrative officer to develop a plan to shut down all general-funded city services except for public safety and revenue-generating positions for two days per week beginning the week of April 12–that’s next week.
The statement continued, “There are no easy decisions or simple ways to solve this budget crisis,” Mayor Antonio Villaraigosa said. “But as the CEO of this great city, it is my responsibility to make these difficult but necessary decisions to steer the city out of this crisis and onto solid financial ground.”
There also seem to be inter-departmental struggles between city departments as to whose department will “take the biggest hits.” The Department of Water of Power (DWP), a city department, has reportedly refused to transfer over $73 million to the city’s general fund and sources say that DWP has a reserved fund of $1 billion. If those figures are correct, will DWP and the city have to drip into their respective reserved funds to continue funding normal city services?
And there does not seem to be any help coming from Sacramento (the state) or from Washington (the feds)–despite the stimulus–because the fiscal crises and budgetary woes are equal-opportunity financial problems that are affecting government at all levels. After the city controller delivered an ominous warning stating that the city is in danger of running out of money within 30 days, the Mayor issued the following remarks, in part:
“For the past year, I have been trying to work with the City Council to put the Department of Water and Power on a more sustainable path: a path towards transparency and accountability, a path towards clean renewable energy and a path towards fiscal health.
“It has been clear to me and it has been clear to the City Council that the DWP needs to change.
So in March 2009, I began to speak about the Department’s fiscal health and the need to increase the Energy Cost Adjustment Factor to account for the rising cost of energy and fossil fuels.
“In August 2009, the DWP Board recognized this need and proposed a two-cent rate adjustment. The Council rejected it and instead, asked for an independent fiscal review. I supported the Council in this decision, and I welcomed the outside opinion.
“In February, the independent consultant finished their exhaustive review and recommended an even larger rate adjustment of 2.7-cents. The DWP Board correctly used this outside, independent review and approved a 2.7-cent rate hike spread over four quarters in a manner that not only secured the Department’s fiscal health but put us on a path to a
greener, cleaner future.
“The Council rejected it.
“I listened to the Council’s concerns. And I agreed to a compromise for a one-time 0.8 cent adjustment with added protections for residents and employers.
“The Council rejected it.
“The DWP Board listened to the Council and did its best to address the concerns and, over my objections, tried to meet the Council halfway with an even more modest adjustment than what I authorized.
“And again, the Council rejected it.”
The memo also stated that during Monday’s budget committee, Councilman Bernard Parks, the budget committee chairman, in responding to both early retirement and the layoff plan, said that such a move would require council members to “start printing money,” adding,
“If we don’t do our job today and tomorrow, and we don’t do it through the rest of this fiscal year, we can close the door on the city of Los Angeles July 1 because we won’t survive next fiscal year.”
A while back when the city was jockeying to pass a budget and before the city’s fiscal crisis had reached its present critical stage, the Sentinel had spoken with Council President Eric Garcetti, and at that time, he said, “This budget is hardly a cause for celebration but we’re glad that we’ve been able to protect some core neighborhood services and keep our public safety momentum moving forward. But this will be a very painful year of shared sacrifice across the board.” Of course, Garcetti may not have known that he was predicting the future.
He continued, “It will necessitate some very deep cuts in the coming couple years but we hope to lead the way by example.” The councilman said that he had cut his own salary and his office budget before asking city employees to sacrifice.
Whatever the final decision is, the Mayor and the City Council have to act immediately; the facts do not lie.