Tuesday, April 6, 2010

LA to Run Out Of Cash on May 5

Happy Cinco de Mayo, Los Angelenos, your city is out of money

“The question I have been asked most often during the budget crisis is, ‘When will the city run out of money?” Greuel said in the e-mailed release. “Unfortunately, we finally have the answer.”

Greuel, 48, said in the release that the city might not be able to make payroll. She asked Mayor Antonio Villaraigosa and the City Council to release $90 million from reserve funds to meet what she described as “an urgent cash need.” The controller’s financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30, according to Golombek.
As LA descends into (more) chaos, their government will be forced to make hard decisions as money becomes increasingly expensive to for them to borrow. If they continue on this path, things could get ugly.

LA is a microcosm of America, both are trying to do too much with too little tax revenue, and as such both are running up massive debt.

Pay attention to LA (and California as a whole) as it goes broke, as this will give us clues to what will happen to America when it finally runs out of money.

Maybe LA will get a bailout from the American taxpayer.

[Via Glas]

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