City Agencies Asked to Plan to Cut Spending by 10%

Los Angeles’ top administrator recommended Friday that all city agencies develop plans to cut spending by 10% to cope with a drop in tax revenue caused largely by the slumping economy.

Citing estimates released the day before by Mayor James K. Hahn, City Administrative Officer William Fujioka said in a report Friday that revenue is expected to fall short of projections this year by $71.5 million.

That comes on top of $84 million in unanticipated costs, creating a potential projected budget shortfall of $156 million this fiscal year, Fujioka said.

The city must take “immediate and decisive action” to control spending, he said.

Hahn on Thursday froze hiring and asked departments to come up with potential savings, but Fujioka said reductions in the range of 10% should be the target of managers.

The mayor supports the 10% goal, said Deputy Mayor Matt Middlebrook. “It is responsible to take steps now to find savings in the budget so we can avoid more drastic action later,” Middlebrook said.

Although funds have been identified to cover most of the budget shortfall, it could deplete the entire contingency and emergency reserve accounts, Fujioka warned.

The administrator said his projections do not include all additional security costs and revenue losses caused by the Sept. 11 terrorist attacks. He also warned that the situation could become more dire if the state slashes funding to the city, as it has in past economic slumps.

“The combination of the slow economy, the effects of the Sept. 11 incident and the possibility of state budget action reducing city revenue suggest that revenue shortfalls may exceed the current anticipated amounts,” Fujioka said.

He said the sales tax revenues are 2.5% below last year and 5% below what was budgeted, while the hotel tax receipt are 5% below last year and 10% below what was budgeted.

Some officials at the Los Angeles Police Department wondered whether budget problems might constrain efforts to bring the force back to full strength.

The LAPD, which is down about 1,000 officers, was given the budget to hire 350 officers this year. Since the Sept. 11 attacks, recruitment of police officers has skyrocketed, creating the opportunity to build the police force back up to its peak levels.

Though Hahn exempted the LAPD from the hiring freeze, personnel officials are uncertain whether the budget problems will prevent them from hiring as many officers as they can.

The number of recruit applications processed so far this month is 1,409, up from 863 in August and 253 in December 2000, said Phyllis Lynes, assistant general manager for the city Personnel Department.

Police union President Mitzi Grasso said she believes two major factors are at play in the increase in interest in becoming a police officer. “I think the drop in the job market in the private sector is a factor,” Grasso said. “And because of the Sept. 11 tragedy, people view law enforcement in a more positive light, which draws more people to the job.”

Hahn’s office is intent that any future savings demanded of the LAPD not hinder the recruiting of police, Middlebrook said.

“The hiring of cops remains a priority,” he said.