Report: LA City Deficit Soars To $87M
LOS ANGELES (CBS) — The city's budget deficit for the 2010-11 fiscal year has jumped to $87.84 million, and it could get much worse unless an effort to privatize parking garages is not approved, according to a report released Monday.
City Administrative Officer Miguel Santana noted that the city's various departments have submitted financial plans that would reduce the overall deficit to $23.65 million. But he noted that a recently identified police-uniform allowance added $9.5 million to the deficit picture, and if the parking- privatization issue isn't addressed, the deficit will balloon by another $53.2 million.
Should that happen, it will require the city "to identify mitigating solutions beyond those identified in the operational plan including layoffs, additional furloughs, curtailed hiring or other reductions," Santana wrote in his report.
Santana reported in October that the city's deficit was $63.7 million.
"With recent actions by the retirement boards for sworn and civilian employee retirement systems, the four-year outlook has been revised," Santana wrote. "As a result the city is facing increased deficits in the coming years, including a $349.8 million deficit in 2011-12, largely attributable to the assumption of lower investment returns for the sworn pension system."
Santana noted that if city departments follow through with their deficit-reduction plans, the remaining budget gap could be covered using the city's unappropriated funds. But he noted that the city needs to complete plans to privatize the operation of nine city-owned parking garages.
Santana said earlier that the contracts could generate millions for the city, with $53.2 million being earmarked to cover employee salaries and other expenses in the current fiscal year.
The rest of the money would be used to replenish the emergency reserve fund; pay off about debts related to the parking garages; and help reduce the estimated deficit projected for the next fiscal year.
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