Los Angeles Mayor Antonio Villaraigosa says he will "guarantee" the city will not go bankrupt on his watch despite perilous red tape that will eat up most of the municipal budget's reserves by July.
"There is no scenario, none, while I am mayor of Los Angeles where this city will ever be bankrupt," he's quoted as saying in a Sunday report by Reuters. "I can guarantee that."
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City Council President Eric Garcetti first brought up the possibility of bankruptcy for the city in December. It's not a far-fetched concept: Since late last year L.A.'s red ink has gotten larger than its $189 million in reserves.
Reuters reported that Villaraigosa personally met with representatives of credit-rating firm Fitch Friday after it warned the city earlier in the week that failure to resolve its $212 million deficit would lead to a second rating downgrade for the city.
Fitch's warning came in a stinging quote from an unnamed represenative: "This is an amazing opportunity for the elected officials to show leadership and for a valid reason," the Fitch rep was quoted as saying by city administrative officer Miguel Santana in a city memo obtained by LA Weekly. "According to the press, though, they can't seem to step up and make decisions. So if it can't be done now, then when?"
Indeed, the City Coucil failed to make a dent in the deficit earlier in the month, inspiring Villaraigosa to step forward and say he would order the layoffs of 1,000 city employees. Bickering ensued, however, about the mayor's authority to make such cuts, and city amasses $338,000 a day in extra red ink as its leadership fights over slashing jobs and departments.