What Could L.A.’s Dramatic Budget Shortfall Mean for Angelenos?

From a drop in street improvements to a shrunken City Attorney’s office, here’s the visible impact the COVID crisis could have

City leaders struggling with a projected pandemic-fueled budget shortfall of $675 million this week took steps to bridge the gap by reaching agreements with a pair of public employee unions. On Tuesday, a deal was announced to defer two different 2 percent raises—one slated for this month, the other for June—with the Coalition of L.A. City Unions. In exchange for delaying the pay hikes, the city agreed not to impose furlough days or layoffs during the current fiscal year for the 18,000 workers covered by the agreement.

On Thursday, a deal was inked with the union representing many Los Angeles Fire Department employees. It calls for pushing back by 18 months the 4.5 percent raises firefighters were scheduled to receive this summer. City leaders in return promised there would be no “brownouts,” or scheduled closures of fire stations or other resources, similar to those imposed during the 2009 recession.

The moves have been heralded inside City Hall, with Council President Nury Martinez declaring on Thursday, “During this pandemic we’ve seen our city employees embody the meaning of ‘public servants’ beyond anything we have ever seen in our lifetimes.”

Yet the cost-saving measures only go so far, and city negotiators continue to seek to persuade the Los Angeles Police Department to accept a similar deferral of raises. The union the Los Angeles Police Protective League has steadfastly refused the entreaties, arguing that officers already took a hit when $150 million was pulled from the LAPD budget in the wake of the racial justice protests last spring.

While the deferrals from the two unions, and federal funding as part of President-elect Joe Biden’s proposed $1.9 trillion coronavirus rescue plan, could help L.A.’s bottom line, the city will continue to wrestle with a fiscal stream that has shriveled.

“Every revenue source has been impacted, and revenues tied to tourism, services, parking, and retail are at risk of further decline,” Rick Llewellyn, the city’s top budget official, said in a December 4 “financial status report.”

The 144-page document charts the city’s response to the constantly shifting fiscal situation. It details belt-tightening steps ranging from a hiring freeze implemented in the spring to a 3 percent budget reduction in all city departments to prioritizing what streets, parks, bridges, sidewalks, and more see improvements.

It also explores the possibility of eliminating 1,894 jobs—including an LAPD hit of 951 sworn positions and 728 civilian employees—though in negotiations in previous years, many proposed layoffs were averted, whether through finding other savings, early retirements, or something else.

Already LAPD Chief Michel Moore has warned that a variety of police services could be affected at the same time the number of homicides and shootings is soaring. This includes eliminating specialized units that patrol Venice Beach and portions of Hollywood. Teams that focus on homelessness and sexual assaults stand to be impacted as the department seeks to ensure that regular patrol services continue.

“We’re going to protect some of the core things, so when there’s a 911 call there’s a fire engine, patrols aren’t going to be cut.” —Mayor Eric Garcetti

Mayor Eric Garcetti, asked about the city’s finances during his Thursday evening coronavirus briefing, said a variety of steps are being taken to ensure the flow of services to Angelenos. He stressed that certain public safety components will continue unabated.

“We’re going to protect some of the core things, so when there’s a 911 call there’s a fire engine, patrols aren’t going to be cut,” he said.

He added that the city’s Reserve Fund will be tapped, and that the financing of certain projects will be extended; the latter step saves money in the short term, but Llewellyn warns that it can impact credit rating agencies’ view of city finances.

Garcetti indicated that the current decision-making on cuts is informed by fiscal moves taken during the Great Recession. He was president of the City Council at the time.

“One thing I said [is] that, unlike 2009, we’re not going to stop doing those things. We’re not going to have brownouts in our fire stations. We’re not going to have tree trimming come to a complete halt and go to zero,” he said.

The cutbacks are propelled by shortfalls that have worsened as the pandemic has endured. Llewellyn’s December analysis details declines including parking fine revenue being $29.9 million below expectations, and proceeds from licenses, permits, and fees underperforming by $26.5 million. The hotel tax has generated $16.9 million less than anticipated.

The financial status report says that Llewellyn’s office is looking to “identify projects to propose for close-out, deferral, or cancelation.” It notes that efforts in the midst of an ongoing phase will not be halted, but adds, “The reductions we propose in this section will save cash by reducing the level of ongoing maintenance or deferring projects that have not yet begun.”

A variety of efforts are pegged for deferral, everything from a $260,000 ADA lift in the Italian Hall at El Pueblo in downtown, to $1 million to help build a park to accompany the Sixth Street Viaduct replacement. Garcetti on Thursday said moves such as purchasing computers could be pushed back.

Llewellyn’s report goes on to detail proposed cuts in individual departments. Some the public will never notice, such as his office slicing an internship program.

Other steps could have a greater effect, such as Llewellyn’s office recommending the elimination of 143 positions from the office of the City Attorney. The move, according to the report, is likely to slow the processing of claims and invoices, and delay the preparation of documents for litigation. Fire Department cuts may result in shrinking or eliminating coming recruitment classes.

Other belt-tightening steps could include a drop in street improvements. Llewellyn’s document states that in the effort to save money, the Failed Streets Program could go from a goal of 42 lane miles repaired down to 17.2 miles.

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