LA city budget gap widens to more than $750 million, despite recent labor concessions

Los Angeles city officials said Friday, Feb. 5, that the shortfall in this year’s budget has widened to $750 million, with the future of the economy remaining uncertain amid the enduring COVID-19 pandemic.

A report from City Administrative Officer Richard Llewellyn on Friday reinforced the ongoing budget struggles brought on by revenues projected to come in $600 million less that what had been anticipated at the start of the COVID-19 pandemic. But the projection no longer contains recommendations for eliminating city positions, following deals struck with civilian, firefighter and police unions.

Proposed furloughs and layoffs were avoided this fiscal year, ending June 31, after city employee unions struck deals to postpone planned raises.

The increase in the budget gap, from the nearly $700 million that had been anticipated in December, appeared to be due to furloughs no longer being implemented after the agreement reached with the civilian employees union. According to the updated report, the civilian employee unions’ agreement to delay two pay increases scheduled to go into effect this year led to $22.7 million in savings for the city in this fiscal year.

The firefighter and police unions both agreed to delay raises that were not set to take effect until the next fiscal year. As of press time, civilian employees and firefighters have ratified the deals, while police unions were getting ready to vote on the agreement.

Meanwhile, city budget advisers say they have identified enough ideas to close all but $77.5 million of the gap looming this year. The recommendations include dipping deeply into the reserves to put $274 million toward maintaining existing city operations, a move that would leave about $183 million left in an emergency reserve account for future stormy days.

The rest of the gap would be closed by borrowing about $150 million, cutting around $158 million in spending, and $69 million in COVID-19 relief funds, under the recommendations. Some newer savings ideas recommended in this report include pulling from travel expense accounts from various departments, including the Los Angeles City Council’s.

The council’s Budget and Finance Committee are expected to meet next week to discuss strategies to address the remaining shortfall.

Last December, city budget advisers had proposed the elimination of 1,900 city positions, possibly through layoffs, which was estimated to make a $45 million dent in closing potential layoffs, more than 1,600 of those recommended layoffs from the L.A. Police Department. But at the instruction of the City Council, that number was reverted back to what the department had originally recommended, which was 355 sworn and 273 civilian positions.

Meanwhile, despite calls for federal relief, repeated attempts to include aid for struggling local government coffers in congressional stimulus packages have failed.

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