The Difficult Choices We Face Ahead
As you know, the economic crisis has hit local governments all around the country extremely hard and Los Angeles is no exception. The city is currently facing an unprecedented $530M budget deficit this year, which will rise to over $1 billion in 2010. The City Council and the Mayor are working tirelessly to tackle this deficit in the coming weeks.
The key to solving this fiscal crisis is sharing the sacrifice broadly without compromising our common values. For instance, while the funding for some city programs will need to be cut, we must not sacrifice the gains in public safety we’ve made in recent years and we must not balance the budget on the backs of the most vulnerable among us. We are in for some difficult choices ahead. Do we pare back libraries and emergency services or anti-poverty programs when we need them most? There are no good answers, but all of America is being asked to make sacrifices. The more we can share that, the better everyone will weather this storm.
At the same time we must face the hard reality that the vast majority of the budget is devoted to salaries, which means that payroll must come down. But we must do it in a way that treats our employees decently and humanely. This means negotiating with unions to reduce workers’ hours and to encourage early retirements. Layoffs must be the absolute last resort.
This also means cutting city office budgets sharply. The Council has already agreed to cut its budget, including salaries, by 10% for next year and in fact has cut its own budget by more than $6 million over the past two fiscal years. I will cut my own salary by the same amount that City employees do. Additionally, we need to accept that, just as with the private sector, wage increases for city employees this year are simply not sustainable.
As we make these hard choices, it’s imperative that we maintain our fiscal strength and retain the highest bond rating in the nation. In addition, it’s extremely important to me that we boost our reserve fund to 4 ΒΌ % of budget, up from under 4 % to act as a yearly rainy day fund and to aggressively work to get additional federal stimulus funds to offset losses (most stimulus funds are for new programs rather than existing ones).
The Mayor submitted his budget proposal to the Council on April 20th and we now have until the end of May to review it and make changes. The Council has begun deliberations on the budget and over the coming weeks will carefully review all the proposals included. You can follow these deliberations online at lacity.org or on Channel 35. I will continue to update you on the difficult process we face; it’s important to me that the process be as transparent and accessible as possible since the solution to this crisis is going to require sacrifice from all of us.
