Thread: Villaraigosa Plans City Budget Cuts

http://www.latimes.com/news/local/la...786,full.story

Villaraigosa Plans City Budget Cuts

L.A.'s incoming mayor suggests departments should scale back spending after a report finds that rising costs could lead to deficits.

By Patrick McGreevy, Times Staff Writer

Los Angeles Mayor-elect Antonio Villaraigosa plans to order budget cuts after he takes office to counter a "disturbing trend" of ballooning expenditures that could put the city in dire financial straits.

Villaraigosa discussed his plans even as city department heads have asked, in memos obtained by the Los Angeles Times, for more money for some programs, including new airport security measures, hiring additional ethics officers and expanding the number of loan officers overseeing housing developments.

The mayor-elect voiced his concern after receiving a warning from City Administrative Officer Bill Fujioka, who said that despite the balancing of next year's budget, spending could outpace revenue by $942 million over the four years beginning July 1, 2006.

"What I will announce after July 1 is a disturbing trend of growth in our budget that I don't believe we can sustain over time," Villaraigosa said in an interview with The Times. "People are going to be surprised."

The mayor-elect did not set out specific plans for reducing spending or increasing revenue, but he said departments would have to "start scaling back a bit."

He deflected questions about new taxes or fees, saying that for now he would try to "prune back waste and inefficiencies."

Councilman Bernard C. Parks, chairman of the council's budget committee, said the city could balance the budget by merging departments and imposing a fee for collecting trash from single-family homes.

The city subsidizes single-family home trash collection by $209 million a year, he said.

Los Angeles' contract for trash disposal ends this month, and the new contract is expected to require millions of dollars in additional tipping fees by the city.

In a report to the City Council, Fujioka said rising costs for pensions, healthcare and salaries will create a potential deficit of $225 million for the fiscal year beginning July 1, 2006, but that could increase to $255 million if the city went ahead with other proposals, including plans to expedite the replacement of traffic signals and building a new crime lab.

"I believe that one of our priorities is going to be to reduce this deficit," Villaraigosa said.

It's routine practice for the mayor and City Council to halt some programs or freeze hiring to cut spending in the middle of budget years.

The deficit is projected to grow to $278 million in the 2007-08 fiscal year if spending patterns continue.

Joe Ramallo, a spokesman for Villaraigosa, confirmed Wednesday that Fujioka's report helped spark Villaraigosa's concerns "to the extent it is consistent with pointing out a structural deficit."

Ramallo declined to say how the budget could be cut.

The job of identifying ways to cut spending will fall on Marcus Allen, who was named by Villaraigosa on Friday as a deputy chief of staff. Allen, who will be in charge of budgeting, has spent the last few years identifying government waste as the top aide to City Controller Laura Chick.

Allen said Wednesday that he was convinced there were efficiencies to be found in the city's $5.95-billion budget.

To eliminate the entire deficit projected for the 2006 fiscal year, Villaraigosa will have to slash spending by 4%.

Parks, a close ally of Villaraigosa, said he and the mayor-elect have been consulting on ways to slash the deficit.

"He realizes we can't replicate what we did over the last few years, providing $300 million in salary increases and $400 million in pension increases," Parks said.

Fujioka said in an interview that the strong housing market was likely to provide the city with up to $20 million more in property taxes than projected next year, but a rise in other expenses was generating alarm concerning future budgets.

Big expenditures hitting the budget beginning in 2006 include $19 million to replace the city's aging and ineffective automated financial management system, which would allow the city controller to better track and control spending, Parks said.

Even though he will not be sworn in as mayor until July 1, Villaraigosa has taken steps to trim fat from the budget.
Last week, he sent a letter to the Harbor Department questioning a budget proposal for next year in which spending increased 16% despite lagging cargo business.

In response, the Harbor Commission cut its proposed budget by 11%, or $68.9 million.

Villaraigosa suggested that more such trimming will be requested in the coming months.

Since he won the election against Mayor James K. Hahn on May 17, Villaraigosa has been meeting with City Council members and department heads. The mayor-elect asked every general manager for a memo that included the department's goals and longer-term needs and vision.

Kim Day, executive director of Los Angeles World Airports, wrote that her department was in "excellent financial condition" but needed money for new security measures and to modernize Los Angeles International Airport.

"Given the uncertain financial health of the U.S. airline industry, LAWA must work toward a reasonable balance of revenues between airline sources and other sources," Day wrote.

Mercedes Marquez, head of the city Housing Department, warned in her 14-page memo that federal funding was declining, and that a state bond to subsidize apartment construction would end next year.

She proposed new fees for condominium conversions as one way help pay for inspections of apartments.

Marquez also said she had "inadequate staffing" to properly manage the city's portfolio of loans to developers.

Fire Chief William Bamattre said his long-term plans included hiring more female firefighters, developing a traffic signal prioritization system and continuing a building program to replace old fire stations.

Ethics Commission Director LeeAnn Pelham wrote that her agency needed permanent authorization for three new positions and an expansion of the panel's offices.

"As an agency that has been severely understaffed since its inception, the city Ethics Commission's efforts to continue absorbing its significant voter-mandated responsibilities with insufficient resources is no longer tenable," she wrote.

Times staff writer Jim Newton contributed to this report.

yea, they need to cut back on city spending so the city can help pay for all that free medical care for all those illegals.

You said a mouthful there, my friend!!!