Los Angeles County faces budget deficit, but seeks to avoid layoffs

Los Angeles County’s chief executive said Monday the county faces a $220 million budget shortfall in the coming fiscal year, as lower tax revenues continue to strain local government coffers.

L.A. County Chief Executive Officer Bill Fujioka sought to put an optimistic spin on the projected deficit for the fiscal year that starts July 1. “The county today is presenting a proposed balanced budget, without a critical reduction in services," he said. "We’re also avoiding any major layoffs."

Fujioka proposes to close the gap by cutting $35 million in spending – mostly through "efficiencies." He also proposes a range of other measures that include restructuring financing for capital projects.

“It’s not a hunky-dory budget. We are not in great shape," L.A. County Supervisor Zev Yaroslavsky said. Yaroslavsky noted several big assumptions in the $23 billion spending plan that his board needs to approve.

“$419 million in shortfall is assumed to be covered by revenues to be identified later," he said. "This is like a major league baseball trade – a player to be named later.”

A big part of that is a complicated federal health care waiver that amounts to more than $300 million.

Like most local governments, L.A. County has shrunk in recent years. It’s wiped out more than 2,000 vacant positions. Fujioka proposes eliminating another 250.

The county employs about 95,000 people.

L.A. County has dipped into its emergency reserve fund too, draining it over three years from about $1 billion to about $200 million. In addition, the county has reduced social services and law enforcement. Sheriff’s detectives must now work patrol part time.

“It’s been a very successful program, except that when a detective is out on patrol he is not pursuing the murder suspect or the robbery suspect," Yaroslavsky said.

Fujioka said the county is in better shape than the city of L.A. He said the county has offered less generous wage increases and pensions to its employees. County labor unions have agreed to forgo cost of living increase for three years.

Fujiokoa is optimistic. He said sales and property tax revenues are beginning to improve.

“We saw a strong December. We saw a strong January. And we’re waiting to see what happens the rest of the year to see if that trend continues," he said.

State and federal budget cuts could put a crimp in any gains.

Yaroslavsky is closely watching what happens in Sacramento and Washington D.C. – and on the stock market, for signs of where the economy’s headed. "I mean these are things that we watch."

Yaroslavsky told a reporter to "hang on, I'll check." The phone fell silent.

“It was down 140 points today," he said of the Dow Jones Industrial Average. "So it’s up and down and up and down.”

Uncertainty, it seems, is the only thing the supervisor can count on.