FOR a while, things seemed to be going so well. Crime has been falling for two decades. Race relations have improved. The weather is as fine as ever and the traffic no worse—in fact, there were even plans for expanding public transport that counted as bold in this culture of sprawl and cars. Eli Broad, the city's leading philanthropist, considers it “one of the four cultural capitals of the world” (along with New York, London and Paris) and talks boldly of attracting as many “cultural visitors” as the other three to its museums and theatres. Antonio Villaraigosa, the city's mayor (and the first Hispanic one since the 19th century), tells visitors that this is the only big city in America where “people don't care who your father is” (Mr Villaraigosa says he has seen his own father, at most, 25 times in his life). LA is, to him, a pure meritocracy and “the capital of the Pacific Rim”.

All of this is true, but hardly helpful now that the city faces a more banal problem: not enough money. Revenues have been falling, and the city is confronting a budget deficit of at least $212m in the current fiscal year, which ends in June, and of $484m in the next fiscal year, according to estimates by Wendy Greuel, the city's chief accountant. This week, after the city's power and water utility refused to transfer some money to the city's general fund, Ms Greuel projected that the fund, the city's main account, will be overdrawn by May 5th. She would have to tap a reserve to keep paying employees and suppliers.

In part, Los Angeles shares the pain of many large American cities during this recession, which has depressed sales taxes and other local revenues. But Los Angeles has the added problem of being in California, which has been suffering the biggest budget crisis and one of the worst housing busts among the 50 states, and which occasionally raids local funds. And California's voters have, in ballot measures over the decades, made all money matters more complicated than necessary. The notorious Proposition 13 of 1978 cut and capped property taxes, still the biggest source of city revenue. A lagging indicator of housing prices, they have been roughly flat this year but are expected to fall next year, according to Ms Greuel's estimates. Proposition 218 of 1996 requires explicit voter approval to raise most other city fees and revenues.

Cutting spending is hardly easier in Los Angeles, which has—like many western cities but unlike the biggest eastern ones—a weak mayor who shares power with a cantankerous city council. Mr Villaraigosa must present a budget proposal to the council this month. He wants to eliminate 4,000 of the city's 48,500 jobs, cutting pay and getting rid of entire departments, such as personnel. On April 6th he proposed shutting most city agencies for two days a week. He is in for a fight.

Any budget solution, moreover, could jeopardise some of LA's hard-won successes. The biggest part of the budget, for example, goes to the police, with about 10,000 officers deployed at the moment. “The last place we cut is public safety,” says Mr Villaraigosa. But Charlie Beck, the police chief, is already not paying for overtime and is struggling just to replace the officers who retire each year. He expects the city council to stop him hiring next year. A recent spate of killings, meanwhile, is a reminder that crime could increase again in this city of gangs. “All the remedies have remained untouched till now,” says Mr Beck, referring to his cops on the streets. Los Angeles touches them at its peril.