Four months into the fiscal year, L.A. is in the red

cityhall2.jpgRevenue appears on target, but unanticipated expenditures and overspending have put the city in a hole - not unexpected given the patchwork budget that the council agreed to earlier this year. Mayor Villaraigosa notified council members of the deficit problems in advance of a report by City Administrative Officer Miguel Santana. From the LAT:

Santana is expected to detail the city's latest financial woes and give his recommendation on employee layoffs. He originally asked for layoffs last spring but the council decided to hold off on a decision for six months. In his letter, Villaraigosa said Santana would also be examining a new list of potential cuts, including a reduction in the starting salaries of civilian city workers, elimination of nonfederal city holidays and paring back raises that are set to go into effect in the next two years.

None of this will be easy to carry off, considering the pushback by unions on the mayor's proposed pension cuts for future workers. One wild card is the effort by former Mayor Riordan to adjust retirement plans (he wants it on the May ballot), though for now the unions seem to have most of the leverage. As LAT columnist Jim Newton pointed out:

Labor's power is heightened in low-turnout elections -- its members are reliable voters -- and recent campaigns for mayor have drawn shockingly low turnout. As one political consultant unaffiliated with any candidate in this race reminded me last week, it only takes about 110,000 to 120,000 votes to make the runoff -- in a city of more than 3 million people.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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