LOS ANGELES — The city of Los Angeles could face a budget shortfall of $400 million to $600 million by next summer after a report released last week shows projected revenues lower than expected. Councilman Paul Krekorian, chair of the City Council's Budget and Finance Committee for the past eight years, said the city has to take a hard look at where it can cut costs.

What You Need To Know

  • The city of LA could face a budget shortall of $400 to $600 million by next summer

  • $600 million in shortfall would result in a nearly 10% budget revenue reduction

  • As a result, the L.A. City Council is considering making cuts to services and employee salaries

  • LAPD has already seen its budget slashed by $150 million

"That's a horrendous impact, would be devastating to services," Krekorian said. "A $600 million shortfall in revenues is almost 10% of budget revenues."

Krekorian said the city's revenue sources are sensitive to changes in the economy, which has suffered badly during the pandemic. 

"We've seen a tremendous drop off in almost all of our revenue streams," he said. "Property tax, sales tax, business tax, utilities tax. Obviously, the temporary occupancy tax that hotel visitors pay. So all of those things have fallen precipitously because of the economy."

As a result, Krekorian said the City Council is considering making cuts to services or employee salaries, which account for almost 90% of the city's spending. 

"We have furloughs of employees currently scheduled to begin on January 17th, and we can't even take layoffs off the table yet," he said.

The potential for cuts to city services, such as public safety, worries Sgt. Jeretta Sandoz of the Los Angeles Police Protective League, a union that represents LAPD officers. The LAPD budget was already slashed by $150 million in July, and Sandoz sees the effect. 

"We're supposed to hire about 500 in the academy this year," Sandoz said. "It was cut by 250, so that really means there's going to be less officers on the streets. Human trafficking, which is huge in Los Angeles, that has been cut back. Slower responses to 911 calls."

The City Council has not asked LAPD to make any additional cuts, but Krekorian said other public safety budgets might be affected. 

"We are going to have to look at the Fire Department. The Emergency Management Department has already incurred reductions. So if these numbers hold and if we don't get help from Washington, there's no question that there are going to be reductions across the board in all of the city services," he said.

Krekorian said the city is also negotiating with unions to find ways to cut costs, and each department must come up with the best ways to reduce spending. But he points out that departments could avoid drastic cost-cutting measures if the federal government steps in to help with financial relief.