Los Angeles will be broke on May 5th, deep in the red by June 30th
CITYWATCH
By Ken Draper “The question I have been asked most often during the budget crisis,” says LA Controller Wendy Greuel, “is when the City will run out of money?” “Unfortunately,” she tells the Council and the Mayor, “we finally have that answer … the City’s General Fund will be out of money … in fact it will be negative $10 million … on May 5th, 2010.” The Mayor issued a statement blaming the City Council: “Today we are facing the consequence of the City’s failure to enact the necessary rate increases …”. DWP Interim GM David Freeman told the Controller the Department had to protect its bond rating and couldn’t afford the promised $73 million funds transfer to the City’ General Fund. Ah, this political power circus would be so much fun … if it weren’t so damned serious. …
LA Controller Greuel: City will be Broke on May 5 – Mayor Blames City Council
City Controller Wendy Greuel declares an ‘urgent financial crisis’ and says the only way to continue paying bills in the short term is to begin draining the city’s already limited emergency reserve. By Phil Willon and Maeve Reston
April 6, 2010 The city’s top financial official issued a grim assessment of the escalating budget crisis Monday, warning that Los Angeles could be unable to pay its bills in just over four weeks. City Controller Wendy Greuel declared an “urgent financial crisis” and said the only way to continue paying bills in the short term was to begin to drain the city’s already limited emergency reserve. Greuel’s announcement was the latest development in an increasingly bitter standoff between the City Council and the city’s Department of Water and Power over how much the municipal utility should charge ratepayers and how much it should contribute to the city’s treasury. DWP officials have proposed rate increases that would range from roughly 9% for most users to as high as 28% for some. The council has blocked those increases, responding to irate reactions from constituents. DWP officials have said that without the extra money, they cannot meet their commitment to send the city an additional $73.5 million on which budget officials say they have been counting. Interim DWP General Manager S. David Freeman, in a letter sent to Greuel Monday morning, said that he would urge the utility’s board of commissioners — all appointees of Mayor Antonio Villaraigosa — to withhold the $73.5-million payment. Without the rate increase, he said, the DWP would not have “surplus revenue” to contribute to the city while still paying its own bills. Angry council members said they were skeptical of Freeman’s assertion and accused the giant agency — the nation’s largest municipal utility — of trying to use the payment to force through the rate increase. “It seems they are holding the whole city of Los Angeles hostage because of their inability to hold up to their word,” council President Eric Garcetti said. The mayor, in response, reiterated his order for agencies to cut spending and expedite bill collection. Greuel said the city would need to pull money from its $191 million in reserve funds immediately to pay its bills next month. She expects the city to be out of money, and probably in the red, by June 30. “This is the most urgent fiscal crisis that the city has faced in recent history, and it is imperative that you act now,” Greuel told the mayor and council members. “That is why I am asking you to immediately transfer $90 million from the city’s reserve fund to the general fund so I can continue to pay the city’s bills, and to ensure the fiscal solvency of the city.” …
