The Los Angeles City Council today is expected to address the city’s worsening budget crisis. Last week, the city administrative officer said a plan to privatize nine city-owned parking garages had fallen through because the Council had placed too many restrictions on the proposed contract. That’s opened up a more-than $50 million hole in L.A.'s already beleaguered budget.
Mayor Antonio Villaraigosa says the deal can be saved. Most on the Council seem to disagree.
In an interview with KPCC’s Frank Stoltze, Councilman Greig Smith – who sits on the budget committee – called the plan ill-fated from the start.
"It's like a monster. It keeps coming back to life," says Smith.
"I think it's dead because the problem is the Council has tweaked it so much that the value is not there. So to get $53 million, the CAO [City Administrative Officer] is saying you're not going to get that. You can try again, and Mr. Mayor, go ahead and try again, but the Council cannot make the mistake it made last year and it stupidly budgeted for the money it didn't have."
Smith says the City Council never should have budgeted with the parking money in mind in the first place.
"It never had the money on the table, it never had a prospect of an absolute dollar amount, and yet there were certain councilmembers said, 'let's take advantage of this now, budget it in,' and Mr. Parks and I said repeatedly, you don't have the money, you can't budget it."
Smith said there were two options if Los Angeles doesn't get the money. "One, we take it out of the reserve fund, which will zero out the reserve fund."
Creditors don't like that idea. Smith brought up that point last week. "If you zero out the reserve fund, you will jeopardize our bond, at a very critical time. Because at the beginning of the summer, we always go out for that trans, that loan, if you will."
That means the city borrows money for operating costs until tax revenue comes in. "We borrow money in advance, knowing the money's coming in, but the bonding agency always looks very dimly on having a zero reserve fund when you're doing that."
Smith says the other option is layoffs. "Literally, the Council has doubled the cost in waiting so late."
It would be difficult to pull off layoffs that fast. Smith says they would have to lay off a few hundred per month. "But we wouldn't get it done by July 1. So that's the critical factor, that we've waited so late, we've put ourselves in such a deep hole, there's no easy way out of this."
The city administrator is advising doing it with furloughs alone. "We're up to 26 days on some employees," says Smith. "Add 10 more days."
Smith doesn't like that idea. "I may have to vote for it because it's the last thing we can do. I don't favor it. I think furloughing people is the dumbest thing you can do to an organization. Because all you do is build in inefficiency."
Smith says it's more than just the effect of someone not working a couple days per month. "It's the interplay with other staff members. When somebody finishes a project and goes to somebody else for review, that guy's on furlough. And that person finishes, and that lady's on furlough. It builds in tremendous inefficiency throughout an organization, and it destroys your personnel's morale too, as well.
"So we should have, as Mr. Parks said, as our CLA [Chief Legislative Analyst] and CEO said two years ago, began a layoff process then. It would have minimized the impact today."