Los Angeles Mayor Antonio Villaraigosa and City Council leaders have begun laying the groundwork for the elimination of at least 1,000 more jobs by July 1 in an attempt to eradicate a budget shortfall that has now ballooned to nearly $200 million.
Only one month after 2,400 city employees were offered early retirement to help patch a budget gap, the mayor and five council members are scheduled to instruct their budget analysts as early as today to prepare for layoffs and look at privatizing city-owned parking garages, golf courses and airports in Van Nuys and Ontario.
"Revenues are significantly lower than original projections and we are prepared to make tough decisions, including layoffs and cuts in less-essential city services to our constituents," states a letter being circulated among city leaders. A draft copy was obtained by The Times.
"We will consider the elimination, consolidation, or outsourcing of city assets and services, furloughs and layoffs where permissible, continued managed hiring with consideration of a hard hiring freeze and public-private partnerships that will generate revenue."
Three council members -- Bernard C. Parks, Jan Perry and Dennis Zine -- confirmed that they had signed the letter but declined to discuss its contents. Villaraigosa Deputy Chief of Staff Matt Szabo said late Wednesday that the letter was not ready for release.
The proposals are a sharp reaction to word -- still unofficial -- that city tax revenues have continued a dramatic decline over the last three months. Villaraigosa and the council have already tried to close this year's budget gap by imposing furloughs, rolling back salaries and cutting some city services.
Since then, the budget crisis has moved into even more treacherous territory, with officials openly worrying about their ability to pay normal operating expenses over the rest of the year.
Without any cuts, the deficit is expected to grow to $1 billion by 2013-14, according to official projections.
"The threat of bankruptcy is real," said Parks, who heads the council's Budget and Finance Committee. "How likely it is depends on how well we manage things over the next few months."
When the Coalition of L.A. City Unions agreed to an early retirement program months ago, its leaders secured a pledge of no layoffs and furloughs over the next two years. But that promise left the layoff door open if tax revenues dropped by $100 million in a single year. That threshold has now been crossed, council members said Wednesday.
Coalition spokeswoman Barbara Maynard said city leaders should not demand another round of salary negotiations until they have tried alternatives that have already been offered by her group, which represents 22,000 city employees. Maynard said 3,000 city workers applied for early retirement but only 400 have yet left the payroll.
"They are exacerbating their budget problem by not moving their people out quickly," said Maynard, adding: "The city bureaucracy has been very slow in implementing these savings."
The draft letter obtained by The Times calls on City Administrative Officer Miguel Santana to look at a number of ways to reduce salaries and retirement costs. It also urges him to prepare for "no less than 1,000" job cuts and to plan for offering early retirement to an additional 300 employees.
The city's mechanism for imposing layoffs is slow and byzantine -- unless officials decide to target only those workers who have been recently hired and are at the bottom tier of the workforce.
A seniority system allows older employees to bump younger ones out of their jobs; the process -- known as cascading -- can take months.
To get through the next 5 1/2 months, Villaraigosa and council leaders will probably need to tap the city's emergency reserve to close such a large shortfall. Yet if they do, Wall Street could downgrade the city's weakened credit rating, a move that would increase the cost of borrowing necessary to keep paying the city's bills.
"Depleting the reserve fund is a huge problem," City Controller Wendy Greuel said.
