Los Angeles heading toward insolvency, says new report


City of Los Angeles officials are in crisis after a huge budget shortfall of over $200 million announced.


Gabriel Bouys

The City of Los Angeles is facing a budget shortfall of over $220 million according to a report by city officials.

Chief Administrative Officer Miguel Santana said that the shortfall may mean cutting public sector employee salaries, privatizing services, and increasing taxes. 

“We’re always in crisis mode; we’re always trying to close that shortfall,” Santana said in an interview with the Los Angeles Times. Without cuts to the city’s expenditures and gains in its revenue stream, he said, “we’re facing the complete devastation of city services, including public safety.”

Los Angeles officials said that the deficit has been worsened by climbing public employee costs and stagnating city revenues.

The Los Angeles Times reported that even after reducing its workforce by 4,900 positions in recent years, the deficit is expected to increase to $427 million by 2014-15.

Santana proposed several ways of making up for lost revenues including doubling a transfer tax imposed on property sales, which he said could generate $100 million.

UPI reported that Santana also proposed raising the city's parking tax by 10 to 15 percent, a move that could bring in $40 million in added revenue.

The report comes just two weeks before Mayor Antonio Villaraigosa releases his budget, which many believe will contain salary freezes and layoffs, said the Los Angeles Daily News.