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‘This Is Going To Be Brutal’: City Of Los Angeles Faces $400-$600 Million Shortfall

City Hall from Grand Park on Tuesday March 24. (Chava Sanchez/ LAist)
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“Ugly.” “Horrendous.” “Brutal.”

Los Angeles City Council members on Monday searched for the appropriate words to describe the city’s fiscal crisis.

City budget analysts released a report on Friday detailing how COVID-19 has knocked revenues even lower than projected, at the same time that unexpected costs have driven spending up and the city has agreed to defer planned furloughs for civilian employees. The projected gap for the budget year that began July 1 has grown to $400-$600 million, according to City Administrative Officer (CAO) Rich Llewellyn.

The City Council’s Budget and Finance Committee heard from analysts and department heads who painted a dire picture of the city’s balance sheet, and what it may take to fix it.

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“I cannot overstate the revenue challenge,” said Llewellyn, adding he predicts program cuts that will “certainly impact services on which our residents rely.”

In September, the council declared a “Fiscal Emergency” to allow the city to implement furloughs amounting to a 10% pay cut for 16,000 civilian employees.

The city also tried offering employee buyouts to reduce costs, but only a fraction of eligible employees actually volunteered for the “Separation Incentive Program.” It’s now expected to save just $2.6 million this year.

Meanwhile, labor unions successfully negotiated an alternative plan to defer the furloughs until at least 2021. Instead, many employees will take an unpaid day in November and April, but receive an unspecified floating holiday, according to SEIU Local 721, which represents many civilian city workers.

“We look forward to working with city leaders to continue aggressively identifying any and all cost-saving options that will above all guard the vital services LA City residents count on and protect the workers on the frontlines of those vital services,” SEIU 721 President Bob Schoonover said in a statement. He added “it is still too soon in this fiscal year to make any drastic decisions.”

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Layoffs have already been floated: Last month, Mayor Eric Garcetti asked city managers to identify places to cut -- including “non-critical” services and employee positions. That was based on a worst-case scenario of revenues falling $200-$400 million short.

Budget chair Paul Krekorian said city departments will have to walk away from programs that aren’t part of their “core services.”

“We need to be prepared to say the city cannot afford to do X, Y or Z anymore,” Krekorian said.

During the public comment period, activists who have been calling for the city to reimagine community safety called in with recommendations.

“There’s no way to make that math work when we ignore the elephant in the room,” said Ricci Sergienko with The People’s City Council. “You need to defund the police.”

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Councilmember Mike Bonin made a public plea to the union representing sworn officers, the Los Angeles Police Protective League, to reopen contract negotiations.

“I’m urging them, please to come to the table,” Bonin said. “The best way you can protect and serve Los Angeles now is shared sacrifice. This city and this city government is bleeding.”

Police union President Craig Lally dismissed the idea in an emailed statement. “With murders up 26% and shootings up 23%, and no sign of slowing, more cuts to police resources make zero sense and put Angelinos at risk,” Lally said. “We’ve already made sacrifices to support City budget shortfalls, they need to look elsewhere."

Krekorian said the city will continue to find savings, but ultimately, personnel costs such as public employee contracts and pensions will have to be addressed.

“Every general manager in the city is being asked to savagely cut their budgets right now.” he said.

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