Villaraigosa backtracks on gloom and doom over budget

When it comes to the Los Angeles city budget crisis, it turns out the sky may not be falling after all.

After months of dire predictions that city officials might have to issue as many as 4,000 pink slips, Mayor Antonio Villaraigosa said Monday that no more than 750 people would probably face layoffs in the fiscal year that starts July 1 – and possibly fewer than that.

Eliminating those positions, as well as 105 workers who have already been laid off, would reduce the size of the city’s projected $485-million shortfall by about $65 million, the city’s top budget official said.

Villaraigosa plans to save an additional $63 million by asking some employees to take as many as 26 furlough days next year. But aides would not reveal how the mayor expects to cover the remaining gap until Tuesday, when he presents his 2010-2011 budget and gives an annual State of the City address.

In a budget memo Monday, Villaraigosa said 3,500 of the city’s roughly 35,000 positions are scheduled to drop off the city rolls in the next fiscal year. To the surprise of several City Council members, that tally includes the jobs of at least 1,456 employees who were already identified for early retirement months ago, as well as workers who have moved to city agencies not affected by the budget crisis.

The memo shows budget plans that are considerably less devastating than the council’s decision in February to eliminate 4,000 jobs “by any means necessary, including layoffs.” Councilman Bernard C. Parks and City Administrative Officer Miguel Santana said that when council members voted, budget officials had always planned to include employees retiring early in the total.

But council members Jose Huizar, Jan Perry, Greig Smith and Dennis Zine said they had assumed that the 4,000 proposed job cuts were in addition to workers taking early retirement.

One council member complained that the city had “frightened a lot of people at City Hall for nothing. I’m sure there will be a lot of relieved people that find they’re not on the chopping block,” Councilman Paul Koretz said. “But you know, we never should have put their heads there to begin with.”

The mayor has already signaled that in next year’s budget he plans to offer tax incentives to businesses that move into the city and that he will continue hiring enough police officers to replace those who resign or retire.

In February, Villaraigosa said as many as 3,000 job cuts could be needed in addition to those allowed under early retirement. Deputy Chief of Staff Matt Szabo said the lower estimate produced Monday was “evidence that our cost-saving measures have worked,” and a sign that the city’s economic prospects are improving.

“We’ve always said layoffs are the last resort and we would work as hard as we could to find efficiencies and other savings that did not require layoffs, and that’s exactly what we did,” Szabo said.

Bob Schoonover, president of Service Employees International Union, Local 721, noted that under an agreement with the Coalition of L.A. City Unions, officials will be obligated to pay out $32 million in deferred raises if a single coalition worker is forced out.

“I think the tools are in place to fix this without any layoffs,” Schoonover said.

Huizar, who opposed the plan to eliminate 4,000 workers, said he wished the council had not thrown out such large numbers and instead simply waited two months for the mayor’s budget to be released.

“It hasn’t been a pretty process,” he said. “The song and dance over the past two months just heightened the concerns and fears of the public and the [Wall Street bond] rating agencies.”

maeve.reston@latimes.com

david.zahniser@latimes.com