UPDATE: 2 p.m. Wednesday.
The city council has just approved a motion to wrest control of the DWP away from the mayor. This would require a ballot measure.
I got a note late Tuesday night from a friend of mine who is a very talented LA librarian. She had evidently just heard Mayor Villaraigosa’s newest plan to shut down all of LA’s “nonessential” agencies’ for two days a week and other dizzying acts of fiscal brinkmanship.
“He’s making a whole lot of people very very scared including me,” she said. And then my normally refined and dignified friend, called Antonio a less than printable name.
The LA Times Op Ed for Wednesday explained the situation in stark terms.
Here are some of the most relevant parts of the essay:
Los Angeles is suddenly back in a deep and immediate financial crisis, and this time it’s not a result of recession, the mortgage meltdown or a persistent structural deficit. All those things pushed the city to the brink, but officials had begun dealing with the problem by making painful yet necessary program and job cuts. Now, just as the city was backing away from the edge, Mayor Antonio Villaraigosa and the Department of Water and Power are trying to see just how far over it the city can hang without falling. It’s an arrogant and irresponsible approach that leaves the city short of cash to pay its bills and compelled to imprudently empty its reserve fund, shut down city services or lay off more people.
At issue is the DWP’s breach of its commitment to transfer cash, as it does each year, from its account to the city’s general fund. As a municipally owned utility, it makes the transfers in lieu of the taxes that privately owned utilities must pay to the state or the dividends they must pay their investors. The DWP promised $220 million in the current fiscal year, and city leaders planned, budgeted and slashed accordingly. But the money comes in installments, and the utility had yet to pay the final $73 million. DWP officials now claim they never had any intention of making the final payment — unless the City Council agreed to increase power rates….
The city agreed to raise the rates—but not as much as the mayor and the DWP wanted. So in retaliation the DWP harrumphed and said it wasn’t going to give the city the $73 million period.
Things have gone downhill precipitously ever since. City Controller Wendy Greuel said that without that $73 million payment from DWP, the city’s General Fund would be $10 million in the red by May 5 and LA wouldn’t be able to meet its payroll. Next came the news that the city’s emergency fund—which is not meant to be the can’t-balance-the-budget purse—had to be raided. The fun-filled day climaxed with the mayor’s announcement that all city workers—save fire and police (or workers for any city agency that “makes money”)—will lose 2 fifths of their salaries, starting Monday. Those who are not laid off altogether that is.
Yeah. I think scared is an appropriate response.
There’s a lot going on in the city
UPDATE: The mayor is on Air Talk on KPCC Wednesday morning. Live right now. Podcast later.
Villaraigosa is interesting. Although I believe this problem deserves to be laid directly at his doorstep, there are some other doors that should get part of it, one of which he mentions.
He said, “If the union leaders would agree to a 4 percent pay cut [at least I think that was the number he gave.] we could generate $450 million. If the unions would take a voluntary cut, I wouldn’t have to shut down City Hall.”
The comments section for the KPCC story is particularly good—with a lot of very angry, and very articulate LA residents weighing in.
NOTE: I’m tentatively opening up the comments section. Operative word, “tentatively.”