Los Angeles needs drastic budget cuts to avoid running out of funds AND reserves by June 30, according to the LA Times.
Mayor Villaraigosa’s last ditch effort to raise funds by increasing electricity rates has been stymied by city council. But if he doesn’t force the rate hike, the Department of Water & Power has threatened to withhold a $73 million payment.
Ah small town politics.
There’s a halfhearted attempt at compromise among the cities powerful interest groups. Councilman Richard Alarcon, the man pushing for a state-wide boycott on pre-crisis swaps, offered his vocal support for the first of four rate hikes. Of course Alarcon is supporting only the bare minimum to avoid default today, leaving the real problem for next month.
In the likely scenario that the city goes bankrupt in June, two possibilities emerge — the same options on offer in Greece: indentured slavery or strategic default.
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