More cuts in services seen as L.A. voters reject tax hike
A day after voters rejected a tax increase, top Los Angeles officials began preparing a new round of cuts to city services, warning that even the Police Department may not be spared.
The sales tax was seen as a last-ditch attempt to help balance the city’s budget without more reductions, which already have included slashing 5,300 positions and scaling back services ranging from sidewalk repairs to 911 rescue operations.
“Everything has to be put back on the table, from the size of the police force to the restoration of fire services to the paving of our streets,” said the city’s Chief Administrative Officer Miguel Santana, who said he plans to deliver a menu of potential budget reductions to lawmakers within days.
How much needs to be cut is not yet clear. But the latest projections show a shortfall of about $200 million in the next fiscal year, officials said. Larger deficits are expected in subsequent years.
The failure to win a half-cent increase in the sales tax, to 9.5%, sets the stage for what could be an impassioned debate at City Hall and on the campaign trail about the proper workforce size and spending priorities of the nation’s second-largest city.
Political observers say Mayor Antonio Villaraigosa and the two contenders now locked in a bitter campaign to replace him will face increased pressure to identify services the city should preserve and how they should be covered.
“This outcome shines a spotlight on the difficulty of the choices which now lie ahead. This is going to be the defining task of the next mayor,” said Raphael Sonenshein, executive director of the Edmund G. “Pat” Brown Institute of Public Affairs at Cal State L.A.
Proponents of the tax increase, including Villaraigosa, Council President Herb Wesson and Police Chief Charlie Beck, said officials made difficult service cuts and won employee union agreements to reduce the city’s projected deficit from about $1 billion to a little under $200 million next year. The higher tax was necessary, they insisted, to protect vital services and keep hundreds of police officers on the job.
But opponents, including mayoral candidates Wendy Greuel and Eric Garcetti, said the city should do more to increase efficiency and revenues. The tax hike would have given Los Angeles one of the highest sales tax rates in the state and Greuel and Garcetti said it would fall disproportionately on lower-income families and be bad for business.
In the end, a 55% majority of voters opposed the measure.
“The more money they have, the more they’ll waste,” architect Mark Finfer said Tuesday outside his Brentwood polling place, in a sentiment about City Hall echoed by many voters.
Hours after the results were in, several City Council members said they had heard the message from voters.
The city is now facing “some very hard choices,” said Wesson, who led efforts to get the tax increase on the ballot.
He declined to provide specifics Wednesday. But during the council’s meeting he sought to assure residents that “we will do whatever is necessary to put the city’s fiscal house in order.” The comment prompted a catcall from the public gallery.
Kicking off their runoff contest at campaign events Wednesday, Garcetti and Greuel each sought to position themselves as the candidate best prepared to address the city’s chronic financial troubles.
Garcetti said he would push for the city’s labor unions — most of which are backing Greuel — to grant concessions, starting with requiring an across-the-board, 10% contribution to healthcare premiums. Some 70% of city workers pay nothing for medical coverage.
“Eighty-five percent of our costs are people,” said Garcetti, adding as former council president he had led belt-tightening discussions with employee unions before. “If things are bad I’m prepared to be at the table day one.”
Greuel emphasized her commitment to working with labor unions and city officials to find savings before considering layoffs or other cuts.
“We can do this without balancing the city budget on the backs of working people,” she said at a press conference where she appeared with city tree trimmers and trash collectors. “We can do this by not dividing our city but in fact bringing our city together.” The event took place at the headquarters of the union that represents 10,000 civilian city employees and gave Greuel its endorsement Wednesday.
One contributor to the city’s budget troubles was a 2007 decision by the mayor and council members to give much of the civilian workforce 25% raises over five years. On Wednesday, Santana, the city’s top budget expert, and some other City Hall leaders said officials need to “look at all our contracts again,” including current labor agreements.
But Bob Schoonover, president of Service Employees International Union Local 721, which represents civilian workers, said: “We’re not going to do that.”
With the tax increase rejected, several city officials appeared to be softening warnings of dire consequences if voters failed to pass the measure.
In television ads before the vote, the police chief warned: “Public safety is now in danger.” Last fall, when the measure was proposed, Beck stood with the council president and predicted that the department would shrink by “500 cops ... a huge impact” without the tax.
On Wednesday, Beck called that doomsday scenario “a talking point,” but said he stands by it as a possibility.
Others, including Councilman Bernard C. Parks, a former LAPD chief, disputed the claim that public safety will suffer. Parks said the department could do away with its three-day work week for many officers.
Jack Humphreville, a neighborhood council activist who wrote the ballot argument against the tax hike, said the results show that people “don’t trust City Hall” and want it to do more to address rising employee pension costs, rein in staffing expenses and focus more on fixing streets and sidewalks.
The city’s recurring deficits reflect larger, regional economic problems over the past 30 years. Since 1990, when the aerospace industry and other manufacturers began a sharp contraction, the county has lost 7% of its employment while the national level has grown by 23%.
Given the head winds facing the local economy, some experts said the city could be better off in the long run without the tax increase.
Brad Cornell, a Caltech financial economics professor, said the tax was a desperate measure that avoided addressing the root of the city’s problems.
“It is scary,” he said. “It has Detroit written all over it with promises you can’t meet covered with taxes that further the economic problems.”
William Yu, an economist at the UCLA Anderson Forecast, said when Inglewood boosted city sales taxes in 2006 and South Gate in 2008, they initially met projections but eventually saw those revenues decline.
Critics, including former L.A. Mayor Richard Riordan, said they expect the city’s leadership to try to paper over the continuing budget problem. “I don’t know what the gimmicks are,” he said, “but I can guarantee you that they will try to find them.”
Times staff writers Catherine Saillant, Seema Mehta, Maeve Reston, Joel Rubin, Martha Groves and Kate Linthicum contributed to this report.
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