L.A. budget chief warns of bankruptcy without tax hikes, layoffs

Los Angeles’ top budget official raised the specter of bankruptcy Friday in a sweeping report that calls for new taxes, possible layoffs and the privatization of some city services.

Chief Administrative Officer Miguel Santana said rising employee costs combined with flat-lining revenues have left the city in a precarious position. Even after reducing its workforce by 4,900 positions in recent years, the city faces a $222-million budget shortfall, he said, a figure that is expected to rise to $427 million by 2014-15.

“We’re always in crisis mode,” Santana said in an interview. “We’re always trying to close that shortfall.” Without cutting costs and coming up with about $150 million in new revenue, “we’re facing the complete devastation of city services, including public safety,” he said.

Raising the parking tax by 10% to 15% would bring in $40 million, Santana said, and doubling the so-called documentary transfer tax imposed on property sales could generate an additional $100 million. Both measures would have to be approved by voters.

Santana repeated his frequent call to farm out some city services to private companies or nonprofits, including the management of the Los Angeles Convention Center and the Los Angeles Zoo. And he raised the possibility of bringing in outside laborers to do some of the city’s custodial, street maintenance and information technology work.

In a proposal that angered the city’s firefighters union, Santana also asked for an evaluation of “various options” for the provision of emergency medical transport services in the city. One option, Santana said, would be to hire a private company to provide the services, which are currently provided by the Los Angeles Fire Department.

“We’re one of the few cities that provide ambulance transport by firefighters,” Santana said, noting that about 80% of the department’s calls are for medical emergencies. He also asked for a third-party analysis of the department’s deployment model “to determine the most efficient and effective deployment of Fire Department resources citywide.”

Pat McOsker, president of the United Firefighters of Los Angeles City, said turning over ambulance services to private industry “would be a public health disaster.”

“There are far too many examples of private ambulance crews abandoning patients who can’t pay, and of corporate EMS companies who abandon communities who won’t pay as the bills go up,” McOsker said. He said city officials should focus instead on restoring services at the Fire Department, which has seen deep cuts in recent years.

Santana’s report comes a few weeks before Mayor Antonio Villaraigosa is set to release his proposed budget for 2012-13.

Villaraigosa spokesman Peter Sanders said the mayor’s budget “will advance some of the concepts discussed” in Santana’s report.

Last week, Villaraigosa said a “large number” of layoffs might be necessary. That announcement came shortly after the city’s five-member employee bargaining committee asked city unions to give up raises scheduled for the fiscal year that begins July 1. Those unions refused to reopen contract talks.

Santana said layoffs could be avoided if employees agree to forgo the raises promised to them for the next two fiscal years. According to him, most employees represented by the Coalition of L.A. City Unions are scheduled for 11% pay increases, and those represented by the Los Angeles City Attorneys Assn. are due for a 6.75% raise. Eliminating those raises would save the city $50 million, he said.

Increasing employees’ share of healthcare premiums by 10% would result in more than $30 million in savings for the city, he said, and raising the retirement age for newly hired city workers would save additional money.

But city union leaders say their members have given enough. Barbara Maynard, a spokeswoman for the Coalition of L.A. City Unions, pointed out that employees agreed to help fund an early retirement program and pension reform in exchange for pay raises.

David Sanders, the director of Service Employees International Union, Local 721, said city leaders are to blame for the city’s fiscal crisis. “To say that city employees are the problem is just wrong,” he said.

kate.linthicum@latimes.com