Mayor Antonio Villaraigosa does not have the power to unilaterally shut down non-revenue generating services - such as parks and libraries - two days a week, the city's chief legislative analyst said today.
Gerry Miller said such a move requires the concurrence of the City Council.
"In order to, in essence, start furloughing people two days a week, the City Council will have to adopt an emergency resolution that lays out and authorizes the furlough plan," Miller told the council.
Miller said the city can make all of its payments through the end of this fiscal year, but will have to deplete its emergency reserve fund to do so if the Department of Water and Power continues to withhold $73.5 million that it had promised to remit to the city.
Meanwhile, Moody's Investor Service downgraded the city's general obligation bond rating by a notch today, saying "the downgrade primarily reflects the continued erosion of the city's historically better-than-average willingness to quickly rebalance its budget mid-year."
"The downgrade also partly reflects the likelihood that the city's general fund reserves at the end of the current fiscal year could be materially weaker than we had previously expected, now that an expected transfer from the DWP may be reduced," it added.
Villaraigosa on Tuesday proposed scaling back city services two days a week in response to the DWP's announcement that it would not be making the $73.5 million transfer to Los Angeles' general fund. City Controller Wendy Greuel said that without the transfer, the city's General Fund would be $10 million in the red by May 5 and the city would be unable to meet its payroll.
The Coalition of L.A. City Unions, which represents the bulk of city employees, quickly issued a statement blasting the mayor's proposal, saying municipal workers and residents were "about to become collateral damage" in a battle between the city and the DWP.
Interim DWP General Manager S. David Freeman said the $73.5 million transfer to the city's General Fund was contingent on the city's approval of an electricity rate hike. A proposed boost in the DWP's Energy Cost Adjustment Factor was rejected by the council last week.
Minus that increase, Freeman said the DWP could not afford to make the transfer.
But Greuel announced today that she planned to conduct a thorough audit of the DWP's finances
"I want to take the politics out of this process and provide an independent review of the DWP's finances," Greuel said. "I want to ensure that there is proper oversight and transparency for how the DWP spends the ratepayers' money and verify the department's claim that they could not complete the Power Revenue Transfer."