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

LOS ANGELES (CBSLA) — The Los Angeles City Council declared a fiscal emergency Wednesday and approved plans to furlough more than 15,000 city employees and carry out early retirement buyouts for another 1,280 employees to recoup lost revenue due to the COVID-19 pandemic.

City Administrative Officer's staff report revenues for the 2021 fiscal year could fall anywhere between $45 million to $409 million below the estimated $6.68 billion.

City Administrative Officer Richard Llewellyn estimated that Los Angeles has already lost more than $50 million while noting that revenue projections were based on the economy reopening more fully by July than has occurred.

"We know now...that the best-case scenario isn't going to happen," said Councilman Paul Krekorian, who chairs the council's Budget and Finance Committee. "So that means...even after we enact furloughs, we're still going to have a shortfall in revenues that are going to have to be accommodated."

According to city documents, $5.79 million will be saved each pay period or $104.2 million in the 2020-2021 fiscal year.

The furloughs, which equate to about 10% of an employee's annual salary, are set to begin Oct. 11.

Although Los Angeles is set to receive about $694 million in federal Coronavirus Aid, Relief and Economic Security Act funds, that can only be used to respond to the pandemic and cannot be used to replenish lost revenues.

City Council members said without implementing the furloughs, they would have to consider laying off employees.

When it comes to retirement buyouts, city staff estimates the buyouts could save Los Angeles an additional $13 million.

"We can't sit and hope that Washington will ride to the rescue," Krekorian said.

We can't hope that we can reopen negotiations with labor, and within a month, get a solution that is going to save hundreds of millions of dollars. It's unrealistic and we have to do the realistic thing of acting on these furloughs so that we don't have to act on worse-(case) scenarios in a few months, because I can guarantee you that if we don't, we will be faced with choices that are much harder."

(© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. City News Service contributed to this report.)

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