Faced with a ballooning budget shortfall, Los Angeles, one of the biggest and wealthiest cities in the US, is proposing cuts to compensate for the revenue shortage. The 212-million-dollar budget deficit hovering over the city is the severest shortfall during the past eight months, a number that could well be doubled by next year. The shortage is attributed mainly to plummeting tax incomes stemmed from an economic downturn in the region and a reduction of property values accompanied by a 15 percent unemployment rate.
And, I'll bet, a little John Galt ...
"The last time we saw this kind of drop in revenue was the Great Depression," Miguel Santana, the city's chief financial officer, told Reuters. "It speaks to how severe this budget crisis is."
To fix the problem officials have proposed several ways to replenish the city's coffers.
While first cuts were made in education and social services, now it is the turn of critical sectors of public life and basic safety to fall under the ax of deep budget cuts.
Among other things like leasing out parking garages to private operators, the city officials are bracing for job cuts.
"It's pretty simple. They are going to need to make some serious spending cuts," said Ian Carroll of Standard & Poor's.
Los Angeles Mayor Antonio Villaraigosa said last week that he was considering plans to shed 1,200 to 2,000 of the city's government jobs in next year's budget, on top of the 1,000 positions the mayor ordered last week to be cut over the next few months.
Villaraigosa also suggested that unions should accept pay cuts to avoid large layoffs. "If everybody took a 5 percent cut, it would add USD 150 million to the general fund," the mayor said on Thursday at an event sponsored by the local business leaders.
Can't happen. Makes too much sense.
Union officials have rejected the plan saying it is contrary to President Barack Obama's effort to create jobs across the country.
"We find it ironic that at the same time Congress is debating a jobs bill, the mayor of one of the largest cities in the country is talking about laying off 3,000 people," said Barbara Maynard, spokeswoman for the Coalition of LA City Unions. "The last thing Los Angeles or any city needs is to have more people on the unemployment line."
Bet you never thought a union official would say something like that ...