Villaraigosa Appeals for Action on Budget

Los Angeles (myFOXla.com) - Underscoring the depth and urgency of Los Angeles' budget crisis, Mayor Antonio Villaraigosa on Tuesday implored the City Council to take immediate steps to reduce the deficit, replenish the emergency reserve fund and protect the city's credit rating.

"I have profound respect for the difficulty of the decisions you have to make, but I want to say this: we can't continue to say `no' to everything," Villaraigosa told the council, which went against the advice of budget analysts last week in voting not to implement any layoffs for 30 days.

"We can't keep saying no to layoffs, no to furloughs, no to department eliminations, no to parking meters, no to (leasing) parking structures, no to privatizing golf courses, the zoo and the convention center, no to lending (discretionary) council funds for the reserve," Villaraigosa said.

"The fact is we can't sustain this business model. The status quo cannot be maintained. We're going to have to change it, and change it now."

The mayor's office said it was his first parliamentary-style, question-and-answer session with the council.

The two-hour exchange was largely cordial, though City Council President Eric Garcetti disputed Villaraigosa's characterization of the council's response to the budget crisis.

"I would like to state very clearly that this council has said yes to a lot of painful things," Garcetti told Villaraigosa. "We've said yes to furloughs, and yes to moving forward with the parking lots, and yes to getting the mechanics' layoffs moving forward and yes to moving council funds."

After Villaraigosa left, the council voted to eliminate the Department of Environmental Affairs, in accordance with the recommendation of budget analysts.

The move is expected to save $500,000 this year but may result in layoffs.

The council also directed officials to initiate discussions with a nonprofit private corporation about running the Los Angeles Zoo.

Under the plan, the city would continue to own the zoo, but would let the Greater Los Angeles Zoo Association manage it.

The council also called for a study on the feasibility of a similar public-private partnership for the Los Angeles Convention Center.

During its previous meeting, the council increased the budget deficit by $10 million by refusing to heed budget analysts' recommendations to immediately transfer a portion of their discretionary fund into the emergency reserve fund.

They voted instead to refer the matter to committee. Today, the council directed that committee to come up with a report by Feb. 18.

It called on another committee to report by Feb. 24 on recommendations to eliminate the Disability and Human Services departments.

"It's very sobering stuff," Garcetti said. "Nobody comes to City Hall expecting the sort of cuts we had to do today but I'm proud the council is taking the responsible moves it needs to, to balance this budget."

"We've got a lot of checks on these things -- people have to come back and have well thought out plans -- but at the end of the day, we can't wait for ways to save jobs and services," Garcetti added. "I think the council lifted a heavy load today, but every day this month is going to be that hard."

Union leaders fought some of the proposals.

"What we find untenable is the prospect of thinking about privatizing work that is not only done better by city workers, but that is done more cost effectively by city workers," Julie Butcher of the Coalition of Los Angeles City Unions told the council.

"Some of the privatization schemes before you would cost three or four times as much money as it costs to do in-house. We urge you to work with us to do those things which make sense."

The council had granted a 30-day reprieve on layoffs in hopes of finding alternative ways to cut costs, but Villaraigosa was blunt.

"There is no situation -- none -- that exists where layoffs will not be a part of the solution here. None," Villaraigosa told the council. "Layoffs will be a part of the resolution of this three-year deficit."

Villaraigosa ordered the elimination of 1,000 positions last week, but gave employees the option of transferring to other positions with are funded with grants or which are in self-supporting departments.

So far, 2,000 employees have applied for such transfers.

Villaraigosa told the council that decisive action was necessary to keep the city's credit ratings from being downgraded.

Representatives from two credit rating agencies expressed concern about Los Angeles' precarious financial position and the City Council's indecision on budget cuts last week.

In a memo to Villaraigosa and the City Council, City Administrative Officer Miguel Santana said Fitch Ratings officials told one of his aides the agency was monitoring a number of factors that could lead to a downgrade of the city's credit rating, the Los Angeles Times reported.

Those factors included the erosion of the city's reserves, the city's structural deficit and the failure by city officials to reduce the size of the city's workforce. Later Monday afternoon, Moody's Investors Service officials also told city budget analysts they were concerned that the council had not adopted certain midyear budget adjustments to deal with a $212 million shortfall, according to The Times. Next year, the city's deficit is expected to rise to $484 million.

Last November, Fitch downgraded the city's credit rating on $2.94 billion in debt -- a move that made it more expensive for the city to borrow money.