LA City Council considers layoffs to cut deficit

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The Los Angeles City Council is considering as many as 1,000 layoffs - and extending mandatory unpaid days off for city employees - to address a widening budget deficit. City Controller Wendy Greuel today said L.A. faces serious cash flow problems.

Traditionally, the city controller issues her independent review of general fund cash flow in March.

“I sent it earlier than I normally would because of the dire circumstances that I believe the city is in," said City Controller Wendy Greuel.

The city’s budget shortfall for the fiscal year that ends June 30 has doubled in recent months to nearly $200 million dollars.

Greuel's report came as the mayor met with his city managers to discuss cuts and the City Council agreed to clear its agenda for two days to address the budget crisis. L.A. faces another $400 million shortfall next year.

Greuel blames a continuing decline in tax revenues, and an early retirement program for city employees that didn’t kick in until this month.

“The anticipation had been that people would literally begin in October or November getting off the payroll," said Greuel.

She said lengthy union negotiations delayed implementation of the program until this month, costing the city millions of dollars in savings.

Greuel said the city needs to cut costs immediately, or face problems borrowing money for day-to-day city operations.

“We don’t want to have a challenge of being able to find someone who would actually lend us this money – or the cost of borrowing that money would be exorbitant."

Later this week, the City Administrative Officer’s expected to issue a financial status report that includes recommended cuts.

A spokesman for the mayor promised "tough decisions" were ahead.