Just a year ago, the City's financial health was the strongest it had been in more than a decade. But then the COVID pandemic hit, causing not only devastating loss of lives and livelihoods, but also the worst budget catastrophe Los Angeles has ever seen.The pandemic has caused a decline in revenues of at least 10% since last year, the worst year-over-year decline in recent memory, far outstripping the worst years of the Great Recession. At the same time, the need for services has increased dramatically. The result is a budget deficit currently estimated at $675 million - and it could still get worse.
In the eight years that I have been Chair of the Budget & Finance Committee, I have insisted that the City exercise fiscal prudence to prepare for an economic downturn. We created the City's first Budget Stabilization Fund, and through disciplined saving we built up the largest reserve in the City's history. These "rainy day" funds will be imperative to the City's survival during this crisis. If we had not done that hard work for the last eight years, the consequences now would be unimaginable.
This week, my committee considered a plan proposed by the City Administrative Officer (CAO) to address the budget deficit. The plan is devastatingly bleak. But we need to be clear-eyed about this undeniable fact -- unless Washington immediately passes significant assistance for local government, Los Angeles and cities across America will have no options for avoiding horrendous losses of employees and services, including deep cuts in the police and fire departments.
Even after reductions in all departments, even after tapping our robust reserves, even after imposing furloughs on our civilian employees, and even after unprecedented borrowing that would spread the pain of this catastrophe over multiple years, the City would still be faced with the possibility of layoffs. The CAO proposed preparing for potential layoffs of 1,900 employees -- including almost 1,000 police officers.
Recognizing the disastrous impacts those proposed cuts to the LAPD would have on our communities, I offered an alternative plan that would significantly reduce the number of potential police layoffs under consideration. The Council overwhelmingly supported my alternative proposal [L.A. council panel seeks to scale back potential LAPD job cuts].
It is important to note that not a single layoff of any employee has yet been authorized. While the City must continue to prepare for the worst, we will not stop fighting to prevent any layoffs from happening if at all possible.
Our work is far from finished. The Council, the Mayor and the City's unions will need to continue to work urgently in coming weeks to reduce costs in ways that will avoid the worst impacts on city services. At the same time, we all need to demand that our federal representatives stop their partisan brinksmanship and enact a recovery measure NOW. That measure must include direct assistance to local governments to replace lost revenues, and it must give the American people the means to pay their rent, put food on the table and return to good jobs.