One Month Left, Los Angeles

by Tony Chavira

Here's a kick in the teeth from BusinessWeek (although didn't we all sorta see this coming?):

Los Angeles to Run Out of Cash in a Month, City Controller Says

Los Angeles will run out of cash on May 5, city Controller Wendy Greuel said today in a release in which she requested a $90 million transfer of reserve funds to pay bills.

The controller said she received a letter from the Los Angeles Department of Water and Power today indicating the utility wouldn’t send an anticipated $73 million payment to the city’s general fund. That money is part of an annual contribution of 8 percent of power revenue that the utility makes in lieu of paying taxes to the city, according to Ben Golombek, a spokesman for the controller.

“The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.”

Yup.  Just wait a month and somehow all of the money we pay in taxes will have already been spent.  Despite the wacky news today, the Los Angeles Times reported two days ago that the Los Angeles city payroll was growing... is it cruel of me to link the story and show a quote?

The city's core 35,000-member workforce increased by at least 3,000 between 2000 and 2009. During the same time, Los Angeles' yearly pension contributions more than tripled to $723 million, fueled by investment losses but also by the larger payroll.

When the effects of the failing economy surfaced in late 2007, Mayor Antonio Villaraigosa and the City Council approved significant raises for union workers and pressed ahead with a police force expansion even as they talked openly of a need for cutbacks and threatened layoffs.

"It's a head-scratcher," said Jack Kyser, a Los Angeles County Economic Development Corp. economist. "If you know that tough times are coming, you should be ultra-cautious. You've had ongoing warnings about the magnitude of the downturn and they haven't been listening."

I'm surprised that we have reserves to tap into, to be honest.  Although it's only a matter of time before we drain those as well.  What happens then?  Use our credit to get a loan from China?  IOUs?  Your guess is as good as mine.

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