The mayor's bombshell comes as the City Council tries to struggle with ways to balance a budget deficit that will reach more than $1 billion in three years if something isn't done now.
The council voted Thursday to study the privatization of city owned or run businesses. That includes trash pickup, street cleaning and maintenance.
There is also a move to privatize the city owned and operated golf courses. The mayor is trying to convince unions to take more pay cuts or increase their pension contributions again.
The talks have been ongoing since a coalition representing 22,000 employees agreed to do those things.
"If we don't cut the size of that payroll and those pension obligations we will not be in a position to meet our financial obligations," said Mayor Villaraigosa.
Barb Maynard, who represents the Coalition of L.A. City Unions, spoke Thursday.
"We've already taken pay cut. We have already increased our contribution into the pension fund," said Maynard. "We think the same should be asked of those contractors before he goes to employees and ask them to give up more, which is very painful for their families. Many of our members are only a paycheck away from foreclosure on their homes."
So the mayor is increasing the ante by making the announcement, before he makes the announcement, that there will be more layoffs. Both sides are playing hardball in the worse budget crisis the city has ever faced.