The city's top budget analyst warned city leaders Friday if they don't stop using one-time fixes to close budget deficits, the city could go the way of Stockton, which is seeking to declare bankruptcy.
In a sobering 52-page report, City Administrative Officer Miguel Santana warned officials the city's costs are growing faster than its revenue. The report predicts the city will run more than $300 million in the red through 2015. "It is very clear that we cannot survive the next four years without continuing to reduce our expenditures and increase revenues on an ongoing basis," Santana said. "The era of doing one time solutions really has to end."
The report, billed as a strategic plan to get the city's budget back on track, recommends a mix of cost-cutting and revenue generating solutions. They include using money from parking meters to fund basic city services, asking voters to approve tax increases on property sales and parking lots and reducing how much the city spends on salaries, pensions, health care and workers' compensation benefits.
According to the report, employee costs will rise an average 4.3 percent per year through 2016, while revenue for the city's general fund is only expected to grow 2.3 percent per year.
The lion's share of employee costs come from health care, and Santana recommends having city workers pay 10 percent of the cost of their health care benefits -- most pay less than 1 percent.
He said the city also cannot afford to pay raises promised to thousands of workers in 2007, when the housing market led city officials to believe the city's revenue would continue to go up.
Deputy city attorneys are scheduled to receive a 6.75 percent increase next year, while most of the rest of the city's civilian workforce is set to get 11 percent raises over the next two years. Eliminating the raises would save the city about $50 million, the report states.
Santana refuted an idea advocated in recent weeks by candidates for mayor and city controller that doing a better job collecting money owed to the city would dramatically improve the city's finances.
"While there is certainly room for improvement in the city's billing and collections operations, the idea that the city's financial woes and structural deficit can be solved through improvements in collections is a myth," Santana wrote in the report.
Most of the city's uncollected debt is in the form of unpaid parking tickets or bills for emergency service from the Los Angeles Fire Department. That debt is either old and never going to be paid or owed by people that are indigent or dead, the report states.
Mayor Antonio Villaraigosa is heeding the report, according to spokesman Peter Sanders.
"In order to eliminate the structural deficit, it is clear that we will need a balance between cuts in spending and an increase in our revenue base," Sanders said. "The Mayor's budget, to be released April 20th, will advance some of the concepts discussed in the CAO's report."
-- City News Service