The city of Los Angeles opened up a $63.7 million budget deficit in the first quarter of this fiscal year – not because of a drop in revenues but because of delays in implementing cost-cutting measures such as layoffs, according to a report being released today.
"Despite the austerity measures implemented by the city in 2009-2010, and the roadmap the city has adopted to achieve financial sustainability, over- expenditures are resulting in a preliminary deficit projection of $63.7 million for this fiscal year," City Administrative Officer Miguel Santana said in his financial status report, which he will submit the City Council's Budget and Finance Committee today.
"This deficit is attributed to the projected expenditures for civilian salary accounts, sworn [firefighters and police officers] overtime accounts, and department expense accounts based on current trends," he added.
A chart showed the city is $11.3 million in the red when it comes to overtime salaries for firefighters. The corresponding shortfall for police officers is $3.8 million.
The city is also in a $13.8 million hole in terms of "other salary costs."
Another chart showed those with the largest deficits overall are the Police Department ($15 million), Fire Department ($13 million), General Services Department ($12 million), and City Attorney's Office, $11 million. Santana said that,"as a last resort," about half of the shortfall could be eliminated by making a withdrawal from the "unappropriated balance," an account containing money that had yet to be set aside for specific expenses.
He added the remaining gap should be closed by the departments that are in a financial hole, and urged them to submit belt-tightening plans within a month.
The city already has shed about 4,000 jobs in the last few years, through early retirement, layoffs and transfers to proprietary departments that do not rely on the city's general fund.
Santana said revenues have been tracking close to projections, but added that may not continue.
"With the slowdown in the economic recovery – exhibited by the double-digit unemployment rate, flat retail sales and declines in home sales and median prices – anticipated revenue from some economy sensitive revenues may not be fully realized," he said in the report.
Santana said the projected budget deficit for the upcoming fiscal year is $318 million – $143 million of which represents pension costs.