Sitting down? L.A. budget shortfall may near $1 billion

Los Angeles could face nearly a $1-billion shortfall in the 2010 budget year because of a mammoth bailout needed for the city’s pension funds, which have seen investments tank because of the spiraling national recession, according to city budget report released Friday.

The grim forecast of a $983-million budget gap comes as Mayor Antonio Villaraigosa already considers widespread city layoffs and deep cuts to services because of the city’s worsening financial crisis, as well as  a plan to raise hundreds of millions of dollars by leasing out city parking garages and meters.

The city’s top budget analyst, interim City Administrative Officer Raymond Ciranna, informed the mayor and City Council that Los Angeles faces a $427-million budget shortfall in 2009-10, driven primarily by declining tax revenues and increases in employee pay and benefits.

The budget gap would more than double in the following year because of the troubled pension system, and the two-year price tag of the pension bailout would be enormous, costing $458 million in 2010-11 and $663 million in 2011-12.

"We are looking at some very difficult times ahead," Ciranna said. "We’re going to have to make some major structural changes."

The Los Angeles City Employees' Retirement System, known as LACERS, and the city's Fire and Police Pension System are expected to sustain combined investment losses of 25% in the current budget year, and have flat returns in the following year, Ciranna said.

The losses could be softened if Wall Street rebounds in the next four months, although that it not expected. The city also could extend the standard five-year time period it normally uses to absorb such losses, he said.

—Phil Willon

Comments

[Robert NO longer in LA]

So wonderful the way the whacko Mayors and the Stooges squander billions...and the brain-dead electorate tells them, "Fine, you're doing an excellent job, and we're sending you back, not to prison, but into Public Office.' So glad to have left a few years ago...the costs of SoCal HAVEN'T BEEN WORTH IT, in years!!!

[Steve (who moved away 10 years ago)]

Now I'm glad I never took a job with the City of Los Angeles. People are over-compensated and ineffectively utilized. I am sure that Mayor Tony will find a way to squeeze mo' money, mo' money. mo' money.

More fees, more penalty assessments, less services. Could there be a bankruptcy on the horizon?

Fire the City Council and fire the Mayor for incompetance.

[Bill]

The minute cash money leaves your sight and gets 'invested' in some Wall Street scam, you can kiss it goodbye. There is a better chance in Vegas, at least you know what the odds are.

[Erwin Speakman]

So? The city hasn't offered to help me in my time of need or protect my company which employs me and pays millions in taxes. So, if the pension fund for city employees some of whom are rude, slow and, to be charitable about it, less than knowledgable, goes down you want me and my company to help pay for it. When the city provides a safety net for me, I'll thnk kindlier about the future needs of city employees. In the meantime, investments by the city's pension fund are no more sacred than privite investments ... there's a risk, not a guarantee.

[dougm]

More horrible news about our city. Another reason I'm voting for Walter Moore for Mayor.

[Walter Moore]

You can fire Villaraigosa on Tuesday. All you have to do is show up to vote.

[ricardo aguirre]

just fire two thirds of the useless state workers
and problem solved

[Jose]

Tell this amateur to start with the $180 million he gives to "former" gang cholos...for good behavior.

Good GOD...how did we end up with this disaster for a Mayor.

[concerned]

well I guess the city will need to cut expenses just like we are doing at home. Just been living beyond your standard of living. The citizens cannot pay for overspending and mis management. I'm sure there are plenty of not needed programs that can be canceled.

[Ruby Jackson]

People, please, please, get out and vote on Tuesday and give Mayor Viva la Raza the pink slip.

[Lynn]

This is an important election. Please people get out and vote tomorrow. Save LA get Mayor Villar out of office. This man has no loyalty to the city and no loyalty to the country.

Please take back the city. Let's turn LA back into a city that all Americans want to visit.

Please vote. Vote Walter Moore for Mayor!

[JoJo]

It now time for the City of Los Angeles to lay off it workers, taxes revenues and incomes are down. The city of Los Angeles ports are inactive. People are not sending. So cut have to be made.

[jake]

Well I guess that means that LA is spending more than they can afford. So lets see how do we solve that problem. To start spending needs to be cut to match expenses. If you cant cut expenses then it is time to step down and elect people who can. LA, Long Beach and many other cities are just overspending and sit and wonder what to do. Its simple cut expenses. ie no more going out to dinner.....get rid of cars....get rid of services you cant afford.....stop expensive trips....expensive gagets...unaffordable electronics....maybe stop overpaying your friends....ever heard of a balanced budget and living within your means......