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Facing $750M budget gap, Los Angeles may delay paying some bills ’til next fiscal year

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The city of Los Angeles under liberal Democratic Mayor Eric Garcetti is considering postponing paying some of its bill as it financial crisis worsens. Facing a massive $751 million budget gap, plus a failure to convince public sector unions to agree to give-backs, the city might defer certain payments to sometime in the next fiscal year.

Richard Llewellyn, the official in charge of the budget, “has asked each city department to prepare a list of contracts with payments due in the last three months of the fiscal year, which ends June 30, to determine which ones could be deferred until after July 1,” the Los Angeles Times reported.


As a thought experiment, imagine the response if a taxpaying individual or business decided to defer a payment owed to the city to sometime in the future as a way to balance a budget.

Putting the squeeze on departments, plus the private-sector businesses to whom they owe money, moreover, city department heads will have to justify the need to make payments on time. Reasons might include avoiding late fees, maintaining an agreed-upon discount for goods or services, or the possibility that nonpayment would significantly harm a small business in the area.

Up until recently, Los Angeles County (and most of California) has been subject to strict, economy-crushing lockdown orders, prompting an effort to recall Democrat Gov. Gavin Newsom.

Even with the shutdown, Los Angeles County has reportedly registered more COVID cases (about one million) than other county in the U.S. during the pandemic, along with approximately 18,000 deaths, which also unfortunately leads the nation, according to the John Hopkins Coronavirus Resource Center.

“Budget officials said Friday they do not yet know how much could be saved by postponing payment of certain bills. They also said deferrals would not be considered for contracts with the city employee union,” the Times added.

As a thought experiment, imagine the response if a taxpaying individual or business decided to defer a payment owed to the city as a way to balance a budget.

The city is expected to engage in so-called deficit borrowing as well as looking to Washington for a bailout, which is a possibility considering that Biden and the Democrats in Congress are in control currently. L.A. officials are supposedly “leaving no stone unturned” in trying to save money, but again, this is is a city run by Democrats.

Despite the red ink, many government employees in Los Angeles are doing just fine, however.

A staggering 20,000 or so public sector employees make over $150,000, including a housing department official who was banking more than ex-U.S. Housing and Urban Development Secretary Ben Carson, a brain surgeon before entering politics, took home.

In the meantime, homelessness, crime, and drug addiction are surging in L.A. even with all the cash thrown at social programs, which is prompting many taxpayers to pull up stakes and leave the area, if not the high-tax state entirely, for a better quality of life.

Traditionally, public sector employees received guaranteed job security in exchange for lower salaries than they might receive in the private sector.

Throughout the country, with politicians seeking union votes, these workers generally now get both job security, which renders them practically insulated from economic downturns, including those COVID-related, and productivity appraisals, as well as often-disproportionate pay, benefits, and pensions. All funded by the taxpayer.

Robert Jonathan

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