Bradley Plans Spending Cuts to Balance Budget : Economy: He vows to hold the line on taxes after hearing gloomy projections from a panel of advisers.
After hearing gloomy projections from a panel of economists and business leaders, Mayor Tom Bradley on Wednesday vowed to hold the line on taxes and balance the city budget through drastic spending cuts.
“We’ll have to make some strenuous cuts and some sacrifices,” said Bradley after his annual meeting with economic advisers. “The last thing we want to do is raise taxes.”
Chamber of Commerce President Ray Remy, who helped organize the breakfast briefing, concurred with the mayor’s conclusions. “That’s the message we are trying to give,” said Remy.
The city is facing a projected $150-million deficit for fiscal 1992-1993. Already officials have imposed a hiring freeze that eliminated 2,000 jobs and a salary freeze on City Council members and department heads.
Some council members are seeking to negotiate new union contracts with the bulk of the city’s 40,000-member work force to freeze salaries and impose about three weeks of unpaid leave in an attempt to close most of the projected budget gap.
Panelists advising the mayor, including experts in real estate, banking and retailing, generally agreed that the local economy is near the bottom and is expected to recover very slowly next spring.
However, some economists, including those at the UCLA Business Forecasting Project, have said the recession could linger in California for another year.
As economist Art Shaw, one of those advising Bradley, said jokingly: “The good news is, the recession is over. The bad news is, this is the recovery.”
Lynn Reiser, senior economist for First Interstate Bank, said, “It’s not clear in Los Angeles that the recovery has begun.”
Reiser, who has advised the city for several years, said, “The economy is likely to improve, but we have no concrete evidence. So the city must be cautious” in crafting its annual spending plan.
Harlan Smith, vice president of Carter Hawley Hale Stores, operator of the Broadway, reported that sales have been flat to slightly down.
“Consumers often lead the economy out of recession,” Smith said. “That’s not the case this time.”
Stagnant retail sales affect the city, which depends on sales taxes for about 8% of its revenues--one of the largest sources of city revenue, officials said.
Chris Taylor of the California Assn. of Realtors said home sales would also remain slow, even when the recovery begins. Real estate agents have an estimated 20-month supply of homes on the market, nearly double the average inventory. Sales of existing single-family homes are down about 6% this year and sales of condominiums are down about 15%, Taylor said.
A slow real estate market can dampen growth in real estate taxes, which account for 14.4% of city revenue, officials said.