Supporters of Proposition A touted the tax increase as a way to fund vital city services like firefighters and police. But the measure was defeated by 10 percentage points.
The city is facing a $200-million budget deficit. The measure would have increased the sales tax in los angeles to 9.5 percent.
"I would have hoped that we would have been able to get some revenues, but for now we're going to have to tighten our belt again," said L.A. Mayor Antonio Villaraigosa.
"The truth is things are getting better," said Los Angeles City Administrative Officer Miguel Santana, the city's chief budget officer. "Our economy is improving. We see revenues going up. They're just not growing at the same level that our expenditures are."
Santana says his staff is working on a report that will make recommendations on where the city can start cutting costs.
"We haven't hired firefighters in the last three years. That's becoming to be a challenge," said Santana. "We're still hiring police officers, and that's going to become more of a challenge as we move forward."
City Councilman Dennis Zine opposed the measure.
"My focus is we need to tighten our belt," said Zine. "And Measure A would have caused a half-cent increase in the sales tax, which means that it would hurt business."
But council members who supported the measure say that there will be drastic reductions in city services.
"The city is in the position where they are going to have to be much more focused on how we define core services," said L.A. City Councilman Ed Reyes.
Santana will present his report to city council later this week. At this point everything is on the table, he says, including possible hiring freezes. Big decisions face several new members of city council and eventually the person who takes over as the new mayor of Los Angeles.