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DWP announces plans to slash budget by $440M

April 6, 2011 12:31:28 AM PDT
The Los Angeles Department of Water and Power announced on Tuesday plans to slash its budget by about $440 million.

The utility company is facing a huge budget shortfall, and the department is expected to feel the pinch over the next several years. The plan includes a hiring freeze, reduction in overtime and cuts to operating costs.

The DWP will no longer hold the annual Festival of Lights at Christmas. The nine-year festival has entertained tens of thousands, who drive, bike and walk the park.

Forty-four of DWP's executives will no longer have take-home cars, which will save about $1 million a year. DWP General Manager Ron Nichols only had his company car for two days.

The cuts include a three-year hiring freeze and are effective immediately. Most of the freeze will be felt in the DWP's offices. As many as 500 people will not be replaced when they retire or leave the DWP.

"We've got an aging workforce, so we've got people that are walking out the door every day, like any major company does," Nichols said.

The nation's largest municipal utility has a little more than 9,000 employees.

Overtime will be dramatically reduced. The hiring freezing and the reduction in overtime are expected to save an estimated $95 million over three years.

"It is a very clear signal that this general manager understands that we're going to have to do everything we can to reduce our costs and our expenses to really give the rate payers of this city the comfort of knowing that we're doing everything that we can to tighten our belt during tough economic times," said Mayor Antonio Villaraigosa.

Broken water lines will still be repaired, and power lines will still be kept in working order when they need it. According to Nichols, the critical jobs will still be filled.

"We have the ability to maintain our system, to make repairs and replacements where we need to, certainly and obviously fix it when it breaks and make some modest levels of getting ahead of the curve on replacing those facilities before they break," he said.

There is still some question as to how much preventive maintenance the DWP will be able to continue, but Nichols says at the end of the day, he's confident they will have the ability to continue service.