06/06/2010 05:12 am ET | Updated May 25, 2011

Villaraigosa Calls For City Agencies To Close 2 Days A Week

LOS ANGELES (AP)-- The mayor of Los Angeles says all city departments except police, public safety and those that make money must close two days a week because of a budget crisis.

Mayor Antonio Villaraigosa (vee-yah-ry-GOH'-sah) announced Tuesday that the city's chief administrative officer will put the shutdown in motion beginning next week.

On Monday, City Controller Wendy Greuel warned that Los Angeles would be unable to pay employees or vendors within a month. She urged the city to transfer $90 million from its reserves.

The city's financial crisis worsened this week after the Department of Water and Power failed to make a $73 million payment to the city. The agency says it needs to raise rates significantly to make such a payment, though the City Council has only approved smaller increases.
City Controller Wendy Greuel appeared on Bloomberg TV earlier today to discuss the budget crisis:

Via the LA Times:

"We have to act, and we have to act quickly," Villaraigosa said at a press conference.

The mayor said he would direct the city's chief administrative officer to immediately begin planning to set the shutdown in motion.

From LA Biz Observed:

Just to recap, L.A.'s slowly building financial crisis erupted in the last few days when the Department of Water and Power said it would not turn over $73 million to the city's general fund. The DWP refused because the city council refused to sign off on the rate increase the utility had proposed. The DWP says it needs the rate hike in order to avoid its own financial problems. As if on cue, Fitch withdrew its AA- rating on bonds that the utility planned to sell this month. The rating was based on the rate hike being approved.

LAist explains that only general-funded agencies would be impacted by the service cuts:

Non-general-funded departments include LADWP, the Port of Los Angeles and Los Angeles World Airports, which runs LAX, Ontario, Van Nuys and Palmdale. As for revenue-generating positions, it's likely that parking enforcement will still be in force, but other important city services--think filling potholes--won't be accessible two days of the week.