After the Los Angeles officials announced Wednesday that layoffs within the government would be “inevitable” to make up for a $1 billion budget deficit for the coming fiscal year, city officials are bracing for uncomfortable conversations, especially with unions.
In the past couple of years, the city achieved labor peace by agreeing to salary raises for most of its workers, including the Los Angeles Fire and Police Departments, largely because of inflationary pressures to “pay them a fair wage,” according to City Administrator Matt Szabo.
But postponing the salary hikes may be a $250 million obligation when the city was to ask to leave “no stone left unturned” to cut costs by Mayor Karen Bass.
The city may not go back to labor unions to ask for some of the pay raises to be delayed.
Szabo said one of the ways to guarantee fewer jobs are cut is to postpone the raise as 80% of the city budget goes toward wages, benefits and pensions.
“It doesn’t look like we can cut without downsizing the workforce,” Szabo said.
Much of what comes next to the city will not be well-received, said former Los Angeles Mayor Antonio Villaraigosa, who furloughed many workers for months and cut services during the 2009 Great Recession.
“I remember the pickets in front of the house,” said Villaraigosa, who also gave himself a 16% pay cut at that time. “I remember the pickets that blocked my children from going to school, but I had to do it because bankruptcy was not an option.”
Villaraigosa, now a candidate for California governor, said the city needs to jettison regulations and bureaucracy to increase economic activity.
“It is just too difficult to build here. It’s very difficult to invest in this town. And that’s just a fact,” he said.
While costs of hiring employees and implementing services are going up, the city’s revenue has declined largely because sales tax, business tax and hotel taxes are down considerably and projected to decline further to over $300 million.
Also the amount of checks the city has been cutting in response to lawsuits is also expected to leave a $300 million hole, Szabo said.
“Use of force cases, employment lawsuits, we’ve had people injured through faulty infrastructure,” he explained.
Raising taxes would help with the city’s budget, but that would require a vote of the public. But various city service fees, such as trash collection, are expected to go up.
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