L.A. Council will get briefing on finances, a day after city's credit rating is downgraded

The Los Angeles City Council today will get what is expected to be a sober briefing on the city's financial condition, a day after L.A.'s credit rating was downgraded.

The city’s credit was downgraded  by Fitch Ratings on $2.94 billion in debt, meaning that borrowing money will become more expensive for Los Angeles as it grapples with a $98-million current-year budget shortfall and faces the prospect of graver fiscal woes in the years ahead.

The financial ratings service credited Mayor Antonio Villaraigosa and the City Council for taking aggressive action to whittle down the budget gap but added it wasn’t enough and that the ratings outlook for the city remained negative. Fitch Ratings, in a statement released today, said the “city’s economic decline, as evidenced by high unemployment, sales tax weakness, assessed value losses and high home foreclosure ... will impede financial recovery."

“It signals that we have some very difficult choices to make in the future," said Administrative Officer Miguel Santana, the city’s top budget official. “We simply cannot be spending at the rate that we have in the past."

Council President Eric Garcetti said the rating downgrade showed that the city still needed to make sweeping structural changes to its $7.05-billion budget. Even after winning concessions from city unions, including pay cuts and an early-retirement program, the city still faces a $98-million shortfall in the current budget year and a $408-million budget gap next year.

-- Phil Willon at L.A. City Hall

Photo: Mayor Antonio Villaraigosa. Credit: Los Angeles Times

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Comments

[Julian B Duron]

The City of Los Angeles is in a financial crisis and it is time this Mayoral Administration and City Council start running this city accordingly.
Every campaign contributor that expects “QUID PRO QUO” for its contribution has to be told by every City of Los Angeles elected official pay back will have to wait.
This Mayors political machine wants what it wants because these contributors donate an obscenely large amount of funds to protect the large business interests in the City of Los Angeles not the tax paying electorate.
I spoke at city council chamber more than once this past and stated that this city council cannot continue as “business as usual” in its spending habits. This scandal ridden administration should be held accountable for the give-aways in waived fees for events, traffic enforcement and police overtime for questionable expenses in city events.
This crisis was on the train tracks 2 years before this Mayor ran for re-election but he did not raise the urgency until after he was re-elected. This city’s elected officials will term out one day and leave the tax payers of Los Angeles and the conned Coalition of Unions with the check. It is my hope that the Voters of Los Angeles remember this come next election.

[brianguy]

all I have to say is, duh? who did they hire to come up with this idea, captain obvious?

[wuzzy]

hmmm...a billion dollar deficit huh ? Well, you guys better get to it and close those 800 extra medical marijuana dispensaries that we've been hearing so much about. We certainly don't want their readily available tax revenue money to get mixed in with all of the other money. Dang potheads.

[Astonished]

And yet those making the most money are still not making any sacrifices! If the City is in such dire straits then all outside contracting should cease immediately and all elected officials, the 50 Deputy Mayors (most appointed by the current mayor) and Department Managers should be taking a 50% pay cut, which is only just barely commensurate to what the actual workers in this City are having to deal with. It was brought to the attention of the City Council very early on that furloughs DON'T WORK, since, while reducing employee pay, it also reduces the workforce that collects fees for the City. Less services means less money! DUH! Back in October, CAO Santana was already stating that he would be coming back in December with a long list of concessions the unions would have to give to him. I guess the lies the unions told their members when they got them to ratify that current contract is coming back to bite them big time!

[Astonished]

Let me give you a couple of examples. The City contracted out to have the new LAPD Station built in the Harbor Division. The company doing the construction (whose contract was approved by guess who) screwed up the construction of the gas pumps. The cost to fix the pumps is so high the company just walked away from it and the City is doing nothing about it! Now, the City must spend more money (they allege they don't have) to hire another contractor to fix the pumps, even thoug they have employees who could fix it for a fraction of the cost.

The City of Los Angeles does not have enough money to pay it's empoyees, or to hire enough jailers to main the new jail in Downtown, but it found the money to pay for the Christmas Parade! Go Figure!