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Official says L.A. risks insolvency without new taxes

April 6, 2012 |  4:18 pm

City Administrative Officer Miguel Santana (r.) listens to Mayor Antonio Vilaraigosa address the media about the city's budget crisis in 2010. Credit: Don Bartletti / Los Angeles Times

Los Angeles' top budget official raised the specter of bankruptcy on Friday in a sweeping report in which he called for new taxes, major pension reform and possibly layoffs.
Chief Administrative Officer Miguel Santana said rising employee costs combined with flat-lining revenues have left the city in a precarious position. Even after reducing its workforce by 4,900 positions in recent years, the city faces a $222-million budget shortfall, he said, a number that is expected to rise to $427 million by 2014-15.

“We’re always in crisis mode; we’re always trying to close that shortfall,” Santana said in an interview. Without cuts to the city’s expenditures and gains in its revenue stream, he said, “we’re facing the complete devastation of city services, including public safety.”

Santana says about $150 million in new revenue is needed. Doubling the so-called documentary transfer tax imposed on the sale of property could bring an additional $100 million, he said. Raising the parking tax by 10% to 15% would bring in $40 million. Additional revenue could come from improved collection of parking ticket fees and ambulance billing, he said.

Santana’s report comes just a few weeks before Mayor Antonio Villaraigosa is set to release his proposed budget for 2012-13. Last week, Villaraigosa said a “large number" of layoffs might be necessary to eliminate the $220-million deficit.

His announcement came shortly after the city's five-member employee bargaining committee asked city unions to give up raises that are scheduled for the fiscal year that begins July 1. Those unions refused to reopen contract talks.

In his report, Santana said layoffs could be avoided if employees agreed to forgo the promised raises.

According to the report, most employees represented by the Coalition of Los Angeles City Unions are scheduled for 11% increases in compensation over the coming two years. Eliminating those would save the city $50 million, Santana said. 

Increasing employees’ share of healthcare premiums by 10% would result in more than $30 million in savings for the city, he said, and raising the retirement age for newly hired city workers would also save money.

One of the city's largest public employee unions, Service Employees International Union Local 721, lashed out at Villaraigosa over those proposed changes. In a recent email to its City Hall members, the union called Villaraigosa "Mayor Two-Face."


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 -- Kate Linthicum at City Hall


Photo: City Administrative Officer Miguel Santana, right, listens to Mayor Antonio Vilaraigosa address the media about the city's budget crisis in 2010. Credit: Don Bartletti / Los Angeles Times