Faced with a growing budget deficit and an endangered credit rating, the Los Angeles City Council voted Thursday to eliminate 4,000 municipal jobs by July 1.
The council instructed "all departments and offices of the city, including elected offices, to expedite the elimination of 4,000 positions by any means necessary, including layoffs." Under the council's instruction, the positions must be identified within 45 days and scheduled for elimination as of July 1, the beginning of the next fiscal year.
The 9-3 vote came a day after a major credit-rating agency, Moody's Investors Service, put the city on its negative watch list, citing delays in dealing with a $212 million budget deficit this fiscal year.
Eliminating 4,000 positions does not necessarily mean 4,000 people will be put out on the street. Some workers may lose their current positions but be transferred to other departments and offices that do not draw salaries from the depleted general fund.
Earlier today, Mayor Antonio Villaraigosa declared that layoffs can be minimized if labor unions agree to pay cuts.
"If all city employees agreed to a 5 percent pay cut, we could save $150 million," he said. "If civilian employees, firefighters and police officers agreed to a 15 percent pay cut, we could save $450 million."
The Los Angeles Times reported that Moody's on Wednesday reduced its opinion of the city's finances from "stable" to "negative," potentially leading to a lower credit rating for the city and increasing the city's cost for borrowing money.
The city's deficit is projected to grow to $484 million next fiscal year and $1 billion by 2012-13.