LA Going Belly Up

The Big Budget Picture

Budget gaps are no rarity for the City of Angels in recent years. It seems like an annual tradition. In fiscal year 2011-2012, the city projected a budget shortfall of over $400 million. For 2010-11’s fiscal year, the tune was the same. As was 2009-10, and so on.
L.A.’s chief administrative officer, Miguel Santana, noted that the budget shortfall is likely to be much greater by 2014-15. “Every year it gets worse,” he said.
The chain of events is always the same. City officials announce a budget shortfall and the mayor seeks to bandage it with gimmicks that fail to address the underlying causes.
Criticizing Villaraigosa’s approach to last year’s budget shortfall, City Controller Wendy Greuel said that ”kicking the can down the road is not a solution when we can anticipate a growing structural deficit in future years.” She was referring specifically to a plan Villaraigosa outlined to borrow money to solve part of the deficit. But her summation applies to the inept budgeting approach of the city for years.
Former Los Angeles Mayor Richard Riordan predicted increased hardships and eventual bankruptcy if drastic action wasn’t taken by city officials. In an editorial he penned in the Wall Street Journal in 2010, he wrote, “Los Angeles is facing a terminal fiscal crisis: Between now and 2014 the city will likely declare bankruptcy.”
Riordan is not shying away from those comments. In a recent phone conversation, he told me that bankruptcy for L.A. could come “as early as next year.” Cal Watch