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News Link • Economy - Economics USA

Los Angeles on the Edge of a Midsummer Bankruptcy

• EconomicPolicyJournal.com
 
The latest tale of financial crisis in California is playing out in Los Angeles. The city faces a budget shortfall approaching a billion dollars, and unless it can find a remedy soon, it may be insolvent by midsummer. As officials cut spending, everyone's feeling the squeeze. Feeling The Pinch, In West L.A. The neighborhood of West Los Angeles is a quiet, middle-class community that even its most committed residents would describe as nondescript. One of its few distinguishing attractions is a mini-civic center with a little courthouse, police station and satellite city hall. They ring a public plaza that should be a lot nicer than it is. Standing there at dusk, neighborhood council president Jay Handal points out seven burnt out street lamps. They are "supposed to protect our citizens who walk through here in the evening," he says, "and they've been out for weeks and weeks." And after a few days of rain, he says, most of the plaza was under a foot of water because the drainage system hasn't been fixed in year. "It's because of the budget issues that we have," says Handal. Cuts Threaten Luxuries And Necessities The "budget issues" Handal mentions are a euphemism for cuts, and they affect more than just the quality of life — they could affect life itself. The fire department has been reducing labor costs by taking several engine crews and paramedic units off the job one day a week, rotating the cutbacks through stations around the city. So depending on when and where an emergency strikes, help may have to come from farther away. The cuts are likely to get more severe. Los Angeles still needs to make up a deficit of more than $200 million by July 1. The city is also facing a shortfall of close to half a billion dollars in the next fiscal year. The political struggle over how to close those gaps led Mayor Antonio Villaraigosa to make an unprecedented appearance before the City Council this week.

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