The City of Los Angeles is in the midst of a fiscal storm. A storm that has been brewing for years and now pushes the city to the brink of bankruptcy. VICA has been tracking this storm for the past several years and has watched it gain momentum. In 2008, VICA released a package of revenue generating ideas and suggestions for spending reductions known as the VICA 50. Few of these insightful ideas were followed up on by the city, but that discussion is for another column. When this document was released the budget deficit was at about $150 million, in just two short years it has ballooned to $485 million. As the storm continues to rage, the city has used the equivalent of sand bags when the response requires wide-spread evacuations. In Mayor Antonio Villaraigosa’s proposed budget for FY2010-11 (which goes into effect July 1) there is a section that calls for operational cost savings that total $176 million. This category of cost reduction includes salaries and benefits, providing an explanation of steps taken to eliminate positions during the previous fiscal year (2009-10) and the cuts included in the FY2010-11. The section claims to reduce the total number of authorized full-time positions in non-proprietary departments by 3,301. This is not the most honest representation of the numbers. The 3,301 position eliminations have been portrayed as layoffs, when in reality the number of actual anticipated layoffs is closer to 750. Instead, the city is using alternative staff reduction tactics that are really not solving the problem of the workforce it cannot support. The city has already offered an early retirement incentive program (ERIP) that provides financial incentives for eligible employees to retire in FY2009-10. It has also instituted what it calls employee transfers and managed hiring. Employee transfers are particularly problematic because they simply redistribute employees who are paid from the general fund to specially-funded vacancies. This means workers whose jobs are eliminated from general fund payrolls are reassigned to departments (such as the Port of L.A. and Los Angeles World Airports) that do not rely on the general fund. Often the transferred employees receive raises because the specially-funded department pay structures are higher than those of the general fund. The heads of the port and LAWA have taken measures to reduce their own budgets and find ways to make their departments run more efficiently. With the employee transfers they are forced to take on additional and unnecessary employees who are, in many cases, not qualified for the jobs they are filling. The practice of managed hiring limits the types of vacant positions that can be filled in the city to public safety, revenue generation and other core services positions. This definition is vague and allows the city to keep these positions on the books, leaving them vacant rather than actually cutting the position. The claim that the city has and will cut thousands of jobs is misleading. In fact, the city has only made slightly more than 100 actual layoffs. And while the cost and staff reduction measures have helped reduce some of the general fund’s appropriations, the reality persists that the city’s current workforce cannot be sustained. Pension obligations and union contract requirements have backed the city into a corner. Without compressive staff reductions that actually eliminate long-term financial commitments for the city, the tab will be passed on to the already burdened business community and Angelenos in the form of taxes and fees. It is time for city leaders to recognize that their financial storm is beyond their control and patch-work solutions will no longer hold back the flood gates. Do you think the city is doing all it can to fix its budget deficit? What would you recommend the city do to solve its budget problems in the long-term? Email your responses or thoughts about the column to [email protected]