Garcetti warns of budget cuts, employee furloughs from COVID-19 pandemic during State of the City address

LOS ANGELES - Delivering an unusual State of the City address in an unprecedented time of coronavirus social restrictions, Mayor Eric Garcetti on Sunday evening called for stepped-up federal funding for cities while warning that municipal services will be reduced due to spiraling revenue and many city employees will be furloughed for about a month.

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"I've never before hesitated to assure you that our city is strong, but I won't say those words tonight," Garcetti said in his speech from a largely vacant City Hall.

"Our city is under attack. Our daily life is unrecognizable. We are bowed and we are worn down. We are grieving our dead, but we are not broken nor will we ever be."  

The mayor noted that the city has built up formidable reserve funds in recent years, but even with those rainy day funds, the revenue shortfalls caused by widespread business shutdowns, a virtual halt to tourism and spiking unemployment will have repercussions at City Hall.

Garcetti will release his 2020-21 budget proposal Monday afternoon, and he said it will be "a document of our pain."  

"Soon, many departments will have to operate at sharply reduced strength," he said. "Cherished programs will lose funding, while recreational and community services will see significant changes. We'll have less to spend on removing graffiti and caring for our urban forest."  

He stressed that budget-cutting will largely spare critical services, such as police and fire protection and other services that "keep our neighborhoods safe, our streets clean, our families house and our children and seniors fed."  

"We've already enacted a hiring freeze in our city government, and we will continue that in the coming year," he said. "Unfortunately, we must also face another painful reality: that our civilian employees will take 26 furlough days over the course of the next fiscal year, the equivalent of a 10% reduction in pay.  

"I don't take that step lightly. Every day we're down one person is a loss to our city," he said. "It's my priority to reduce the number furlough days as soon as possible, and I've called on the federal government to either loosen restrictions on emergency funds that prevent us from using them to replace lost revenue, or in the next CARES package, help bail out cities, as they've bailed out banks."

Garcetti made several pointed calls for federal assistance for cities, including a request to use Section 8 housing resources to help homeless people stay off the streets once they leave temporarily shelters or hotels and motels where many are being moved to protect them from the coronavirus.

He said evictions and foreclosures should be stopped across the nation during the pandemic, which Los Angeles has already implemented, although people will still need to pay back the rent they owed while unable to work. 

"I believe that Los Angeles will inspire the groundwork for a future that is much better than 'normal' ever was," he said, adding that Angelenos voted to use their own money to fund homeless housing. "I called for a FEMA-level response to our homelessness crisis almost two years ago, and it took this virus to finally get the federal funding to begin to make it happen."  

Garcetti also said the federal government needs to help the nation's cities that have made significant expenditures to assist their residents and cut jobs due to crashing revenue during the pandemic. He also called for a national infrastructure bill and to make college free.  

The mayor said the test for Angelenos and the nation will be how they come back to daily life once the pandemic subsides, and he reiterated quotes former President Franklin Delano Roosevelt as the U.S. clawed its way out of the Great Depression.  

"That spirit we have felt each night at home and across our neighborhoods and across this city, that is the spirit that must move our economic recovery and our commitment to heal an unjust world," Garcetti said.  

Some of the major declines in revenue the city has experienced through its airports, which have seen a 95% reduction in air traffic, as well as tourism and entertainment industries that have been temporarily shuttered.  

The Port of Los Angeles has also been operating at about 75% to 85% compared to last year since the pandemic affected global trade.  

"From a fiscal perspective, this is the worst it's ever been," he said, saying the coronavirus impacts dwarf those seen after the Sept. 11, 2001, terror attacks.

"We've borrowed $70 million to date from our Special Funds and our Reserve Fund to front the costs related to our COVID-19 response. Some of that will be reimbursed by the state and federal governments. Some may not."

Garcetti said the measures the city took to keep people at home were "drastic" but necessary.   "The lessons of history taught us that the cities that acted slowest during pandemics suffered the most, in the toll paid both in lives and livelihoods," the mayor said.

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"We asked you to sacrifice and to help save lives, knowing that it would be a blow to your stability and your income, but knowing that not doing this would be far, far worse."  

As the city shut everything down short of grocery stores, pharmacies and other businesses deemed essential, Garcetti said it could be months before people are able to safely gather in large groups once again.  

Garcetti said Thursday that "every department will be expected to make cuts," although the police and fire departments will be largely spared in terms of personnel reductions.

However, he warned that those agencies "are not immune from managing their money, cut and make sure we don't have any fat."  The city government is currently under a hiring freeze, and the mayor said that will continue "in the coming year."  

The city may face an economic downturn worse than the 2008 recession, and as many as 300,000 Los Angeles residents may be unemployed right now, he said.  

City Controller Ron Galperin has estimated the city will fall about $231 million short in projected revenue this fiscal year, and as much as $598 million next year. He said the shortfalls will strain the city's ability to provide services and will require "some very difficult budgeting decisions "this year and in the future.  

Councilman Paul Krekorian, who chairs the City Council's Budget andFinance Committee, noted that the city has been building its reserves in recent years, helping to offset the steep financial losses now being seen.  

"I'm really proud of the fact that we ... the council and two mayors now, have spent so much time and energy developing that reserve fund so that we would be prepared for a rainy day," Krekorian said.

"And it is very stormy right now." Garcetti is slated to present his budget proposal Monday, documents for which will be available at 1 p.m. either on the mayor's website at lamayor.org or the city's at lacity.org, and his office said the mayor will address the city's finances during his daily coronavirus update at 5:15 p.m.  

City Council President Nury Martinez, responding to Garcetti's speech, said the city has "tremendous and daunting challenges ahead of us."

And she echoed the mayor's theme that when the city reopens, it should be on more fiscally even ground. "It is my hope and the city council and mayor's duty to ensure that we are a fairer city, that we prioritize communities that have held us up but that we haven't always fulfilled our end of the bargain -- that we put families first and honor and respect the working poor and the diverse communities that are the lifeblood of our city," she said.  

One of the city's major employee labor unions, Service Employees International Union Local 721, issued a statement saying it will work to "mitigate and reduce the number of furlough days and to address the equity of those members impacted."

The union noted that it had already secured a commitment that no workers will be laid off, along with "the preservation of all city services and an agreement to fund all currently agreed-upon future salary increases for city employees."

Today marked exactly one month since the city's Safer at Home orders were issued.