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Garcetti Warns Of Potential Layoffs As City Grapples With Impact Of COVID-19 On Budget

LOS ANGELES (CBSLA) — In the wake of the ongoing coronavirus pandemic and the devastating impact it has had on the city's budget, Los Angeles Mayor Eric Garcetti Friday instructed department heads to begin preparing for a potential layoff scenario.

"While we still navigate many unknowns, one thing is absolutely clear: the pandemic continues to have a devastating effect on City finances," Garcetti wrote in a memo obtained by CBS Los Angeles. "We have seen the impacts across our books and our budget."

Revenues in Fiscal Year 2019-2020, which ended June 30, fell $200 million short of what was budgeted, Garcetti said, and the city's reserve fund has been diminished to $263 million — less than 4% of general fund revenues.

For Fiscal Year 2020-2021, which began July 1, the city's Office of Finance has projected a shortfall of $45 million to $400 million — despite implementation of a buyout program, hiring freezes and potential furloughs.

RELATED: LA City Council Declares Fiscal Emergency; Plans To Furlough Over 15K Employees And Buyout Nearly 1.3K

"Although the magnitude of ultimate revenue shortfalls is unclear, the [City Administrative Officer] has indicated that the city is already tens of millions below budget in the first two months of the fiscal year alone," Garcetti wrote. "We must take action now to put ourselves in a better position to withstand the financial crisis created by the COVID-19 pandemic in our city."

In an effort to get ahead of the worst impacts of the pandemic on the budget, Garcetti called on all department heads to begin the necessary preparations for a potential layoff scenario — including identifying noncritical service areas and positions that could be proposed for deletion.

The mayor also instructed Richard H. Llewellyn, the city's administrative officer, to work with unions representing city employees to develop potential cost savings proposals — including the possible deferral or cancellation of previously negotiated salary increases — and evaluate potential cost savings by decreasing the amount and cost of work currently being contracted out.

Garcetti also called on all general managers to continue strict adherence to the city's hiring freeze, provide the city with proposals to decrease spending by 3% across the board and find other potential sources of revenue and cost savings.

The memo was sent to all city departments except those that manage the airports, harbor, water and power, fire and police pensions and the city employees' retirement system.

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