The CAO’s Other Affairs

NEIGHBORHOOD POLITICS-The City Administrative Officer (CAO) is the chief financial advisor to the Mayor and the City Council, reporting directly to both. The Office studies and makes recommendations on City management matters and assists the Mayor and Council on all aspects of the City budget. It also pursues other avenues for City revenue and oversees the City’s war on homelessness. 

The CAO also secures FEMA Funds for the City when emergencies are declared, addresses issues such as capital projects and staffing which transcend multiple departments, and looks for ways to generate more income for the City government. 

The FEMA Funds (partial) solution 

In an emergency, funds are traditionally provided by FEMA’s Disaster Relief Fund to assist localities through catastrophes such as earthquakes, wildfires, and riots, which demand funds that are not in local budgets. 

States and cities must adhere to balanced budgets while the federal government can run deficits and even mint money to keep the country running. 

Historically, however, the Feds have tended to drag their feet in remitting those monies. Los Angeles is still waiting on reimbursements from the Northridge Earthquake. 

And FEMA pays hard costs, not revenue losses. 

The point person in the CAO’s Office is the Inspector General who is responsible for Revenue Management/Disaster Grants. However, at this point in the crisis, the Mayor's office is coordinating the efforts with the state and federal governments. As of early May there was no specific coordinator. 

On June 11, the CAO reported that the pandemic is anticipated to reduce projected City revenues for this fiscal year (ending June 30, 2020) by an aggregate in excess of $250 million. This has already required the transfer of $288 million out of the City’s already shortchanged Reserve Fund. In addition, the City has taken a $120 million loan from the Building & Safety Reserve Fund, which must be paid back with interest. 

Nobody at City Hall can guess what the impact will be for the next fiscal year which starts in July, but revenues will almost certainly be far less than what was assumed for the “balanced budget” adopted earlier this month. 

FEMA’s budget consists of an allocation for disaster relief based on what has been spent over the prior 10 years. When it is anticipated that those FEMA funds will be depleted, Congress can issue additional Federal guarantees which it did once the projected costs of the pandemic became clear.  The CARES Act was signed into law on March 27th. 

California was supposed to receive $15 billion to cover its COVID-19 costs incurred between March 1, 2020 and December 30, 2020. LA County’s share was to be $1.7 billion of the state’s take, and the City of Los Angeles will reportedly see close to $700 million. City departments are itemizing pandemic-related expenditures and reporting them every two weeks. 

However, it is unclear how much money has been provided to the states and cities to date, and the Trump administration has, in fact, threatened to withhold funds based on partisan penchants. 

Capital Projects 

The CAO has oversight for major building projects including ones for public safety (police and fire), municipal buildings, recreational and cultural facilities, seismic retrofitting, clean water, and transportation. 

Most of these are taxpayer or federally mandated, some have some degree of urgency. 

With the pandemic, some may be put on hold or face project slowdowns but will need to be addressed on a case by case basis due to existing contractual commitments and other obligations. 

Staffing Plans 

The early retirement incentive plans introduced following the Great Recession focused on senior employees to reduce aggregate salaries. This unfortunately led to a loss of institutional knowledge. 

Due to the hiring freeze instituted at the same time many departments have a missing cohort and now a large percentage of staff eligible for retirement. Perpetuating departmental experience and procedures is critical to preserving long term operational stability for Los Angeles. 

The CAO does an annual review of City-wide succession planning, on how departments are addressing continuity and how to prepare the next cohort to take on greater responsibility. This includes developing the training to provide City employees with opportunities to grow and assume senior positions. 

They should also work with the Personnel Department to overhaul the current civil service system to make it more accountable to the needs of the City.

Vacancy Tax 

At a time of increased homelessness and lack of affordable housing, vacancies due to absentee owners, whether speculative investments  or a West Coast pied-á-terre for the wealthy, drive up rents and contribute to the loss of potential economic activity in our neighborhoods.  

One new source of funding that is being contemplated is a vacancy tax. Such a tax could both encourage economic activity and increase housing availability while creating an additional revenue stream to be earmarked for affordable or homeless housing. 

Can you throw the City a Life Preserver? 

The CAO’s office now faces multiple challenges to improving the City’s productivity, economy, and efficiency; added to the public sector unions’ intransigence and the City Council’s resistance to change are unpredictability of the pandemic and Black Lives Matter protests. 

They need will need all the help they can get to ensure resources are available to maintain quality of life for all Angelenos. 

How can the City improve services AND balance its budget?  Submit your great idea to the CAO here.  


(Liz Amsden is a member of the Budget Advocates, an elected, all volunteer, independent advisory body charged with making constructive recommendations to the Mayor and the City Council regarding the Budget, and to City Departments on ways to improve their operations, and with obtaining input, updating and educating all Angelenos on the City’s fiscal management.) Prepped for CityWatch by Linda Abrams.