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L.A. City Unions Coalition questions Villaraigosa's authority to shut down services two days a week

April 7, 2010 |  9:28 am

The financial dominoes are continuing to topple at Los Angeles City Hall, with a Wall Street rating agency issuing a new downgrade of the city's credit, largely because of the Department of Water and Power's refusal to transfer $73.5 million to the city's struggling general fund.

Moody's Investors Service downgraded its rating of the city's general obligation debt from Aa2 to Aa3, saying the DWP's decision to abandon the transfer could leave the city's reserves "materially weaker" than expected at the end of the year. The utility reneged on its promise to provide the money after the council refused to support its particular plan for increasing electric rates.

A lower bond rating increases the interest rate paid by the city to borrow money. A more detailed report on Moody's message can be found on The Times' business blog Money & Company. 

Mayor Antonio Villaraigosa called Tuesday for non-essential services, such as libraries, parks and senior centers, to be shut down twice a week, saying the loss of $73.5 million had forced his hand. The Coalition of L.A. City Unions, which represents roughly 22,000 city workers, questioned whether the mayor has the authority to carry out the plan and complained that its members -- and the public -- had become "collateral damage" in a political fight over electric rates.

"This is playing brinkmanship and city residents will pay the price," the coalition said in a statement. "This is not a game."

Villaraigosa plans to hit the airwaves with his budget message throughout the day, appearing on CNN and other outlets. Councilman Bernard C. Parks, who has criticized the DWP over its refusal to transfer the money, had his own series of media appearances scheduled, according to City News Service.

-- David Zahniser at Los Angeles City Hall

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