City of Los Angeles Plans to Cut 1,000 Jobs in 2010 due to Lower Than Expected Tax Revenues

Hello Los Angeles Small Business Owners and Entrepreneurs,

In a blow to an already fragile local economy, the City of Los Angeles Mayor Antonio Villaraigosa announced yesterday his plans to cut city jobs in 2010 due to the lower than expected City Tax Revenues. City officials plan to shed 1,000 jobs to patch a nearly $200-million budget gap.

Mayor Villaraigosa and five council members tried to display unity Thursday by releasing a letter calling for the job cuts. The release of the letter calling for job cuts came hours after the city's top budget analyst revealed that midyear tax revenue is $186 million lower than expected. Tax revenue has declined by double digits for four straight quarters, the worst drop since the Great Depression, City Administrative Officer Miguel Santana said.

To deal with the downturn, Villaraigosa and council members have agreed to slash payroll costs by allowing 2,400 civilian employees to retire up to five years early. But the city's budget picture is so dire that Santana predicted 1,000 jobs would need to be eliminated, in addition to the 1,000 mentioned in Villaraigosa's letter, over the next two years to keep the city afloat.

City Administrative Officer Miguel Santana said hundreds of layoffs would probably be avoided if the city allowed additional employees to take early retirement. Or they could be moved to jobs not paid for by the city's general fund, which covers basic services including public safety. City leaders would also begin looking at services that can be done more cheaply by private contractors, he said.

The City of Los Angeles large operational budget of over $7 billion dollars has proved flexible in the past; however, ballooning pension payments and consistent declines in business tax revenues over the past two years has hit the city budget especially hard.  Although many throughout the city do not like the idea of laying off such a large amount of employees, the recent economic decline has left City leaders with little alternative.

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