Los Angeles faces a budget shortfall of nearly $208 million,

As you know, the City of Los Angeles faces a budget shortfall of nearly $208 million, and we expect it to exceed $400 million next year. This is the most serious situation we have faced in 75 years and without drastic steps, the City is threatened with bankruptcy. We cannot allow that to happen.

As the City Council and the Mayor consider the Three-Year Financial Sustainability Plan, we will make the most difficult decisions that any of us have faced. Cutting services and laying off employees are the last steps that any of us want to take.

But bankrupting the City is not an option. The bankruptcy courts would force the City to implement even more drastic cuts and impose far more layoffs than we now face.

Many in the public and the media have responded with alarm at reports that proposals to cut, consolidate or re-organize City departments would mean “gutting” important services that the community depends on. Most of the proposed cuts and consolidations are in Cultural Affairs, Environmental Affairs, Department of Neighborhood Empowerment, Department on Disability, and Human Services. The cuts would not eliminate the programs but would re-align their functions in other departments, which would eliminate duplicative administrative costs.

The council must have the fortitude to do what needs to be done to ensure the financial survival of the City.

The time is now to cut the fat, and make sure the community receives the most essential core services they pay taxes for. Those are Police and Fire protection, street services, water and power, sanitation, parks and libraries. For too long, the City has grown into a bloated bureaucracy, providing services that can be met far more efficiently, effectively and less expensively by the private sector and non-profit organizations.

The editorials in the LA Times and the LA Weekly this week got it right. The City has more than 34 commissions and boards and 49 departments and bureaus. Not every service requires its own commissioners, offices, office equipment, and administrative staff. The City must concentrate on the services that are at the core of its mission: public safety and infrastructure.

To see the editorial in the LA Times visit
http://www.latimes.com/news/opinion/editorials/la-ed-budget3-2010feb03,0,6066236.story.
To see the story in the LA Weekly, visit
http://blogs.laweekly.com/ladaily/city-news/la-council-delays-budget.

Of the 1,000 job cuts that are proposed, 360 are positions that would be moved off of the general fund (which pays for basic city services) and into special funds. This will save the city $50 million this fiscal year. This is key because 70% of discretionary general funds are devoted to public safety. That leaves approximately $1 billion to pay for every other city service other than Police and Fire.

Public-private partnerships could mitigate up to $100 million of the budget hole. This would include securing long-term lease deals for private sector companies to operate City parking structures and lots. Such partnerships are being proposed to operate the L.A. Zoo, the Convention Center, City golf courses and parking meters. Like the re-structured or removed Departments, the services will still exist, but can be provided much more efficiently without the fast-increasing liability to our pension fund.

In 2004, I hosted a 12th District Neighborhood Council Budget Workshop. Unlike the Mayor’s budget process, we reviewed the entire budget, line by line. The participating Neighborhood Councils advised the City to sell off the Convention Center, the L.A. Zoo and to consolidate the social service departments. I put that advice into a motion which I introduced to Council on their behalf, and the City is finally acting on those same recommendations.

We also approved reducing – not eliminating – the subsidy for trash hauling service that is offered through the Lifeline Program to bring it into line with other large cities in California. L.A.’s Lifeline pays for 100% of the monthly bill for qualifying low-income seniors and people with disabilities. A survey of 10 cities in California showed that Los Angeles offered by far the most generous trash subsidy. The second highest subsidy is offered in San Jose – 30%, followed by L.A. County at 25%. And most cities subsidized 10% or nothing at all. The program is currently $6.7 million over budget.

If we do not fill $208 million of the budget deficit by June 30, the City will be insolvent. Bond rating agencies will further downgrade the City’s credit rating, making the cost of borrowing prohibitive. Essentially, the City will stop functioning. We can no longer afford to kick the can down the road – we have reached the end of the road.

I applaud the decisive, difficult decision taken by the Mayor on Thursday to move forward with the layoff process immediately and break the impasse in the City Council. He issued an executive order after the City Council failed to vote for taking the necessary steps on Wednesday. And amazingly, the Council even managed to add $4 million to the deficit by the end of the day, and delayed layoffs for another 30 days. Every day that we delay adds an additional $340,000 to the deficit. This inaction is a disgrace.

None of us want to take these difficult steps, but we have run out of options. We have taken oaths to ensure the survival of the City, and we will be leaving it in ruins for millions of residents and burdening future generations with cleaning up the mess if we do not do what must be done now.

Times are tough for all of us, but we want the people of our community to know that our office will do everything we can to help mitigate the effects of these steps. We are committed to doing everything we can to continue to provide the most essential services to the public in our District and the entire City.

Sincerely,

GREIG SMITH
Councilman, Twelfth District