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29
Sun, May

Trouble Ahead for LA’s Budget

LA WATCHDOG - Controller Ron Galperin’s Revenue Forecast Report has both good news and bad news. 

As a result of the infusion of almost $1.3 billion from Washington, the City was able to balance its budget for the last two years and established reserves of over $725 million, representing more than 10% of projected General Fund revenues, a long-time goal of the City Administrative Officer.  

The Controller has projected General Fund revenues for the upcoming fiscal year (2022-23) of a record $7.1 billion, a 4% increase over estimated revenue this year of $6.8 billion, adjusted to eliminate $725 million of one-time money from the American Rescue Plan ($640 million) and the Reserve Fund ($85 million).  

Importantly, Galperin assumes that the economy will continue to recover from the pandemic, reflecting continued growth in the City’s seven economically sensitive taxes (property, utility users; business, sales, hotel, documentary transfer, and parking occupancy taxes). 

The bad news is that there is “trouble ahead” according to Galperin.  Revenues for the upcoming year (2022-23) will be $460 million lower than estimated revenues for the current fiscal year because the City will not have the benefit of the $725 million of one-time money from the American Rescue Plan and its Reserve Fund.   However, this one-time revenue was used to fund homelessness, equity, and other programs, raising the question of where the money will come from, if at all, to continue these efforts. 

At the same time, there are other pressures on the upcoming budget.  The Police Department is asking for a 12%, $212 million increase in its budget.  City employees will receive a cost-of-living salary increase in July that was deferred during the pandemic.   And several union contracts will be renegotiated, resulting in salary increases.     

Galperin’s advice is for City Hall to refrain from adding new, unaffordable expenditures or programs to the upcoming budget.  He also recommended not to use the Reserve Fund to cover operating expenses, such as homelessness, labor agreements, deficit financing, and other non-emergency expenditures.  

But more than likely, the Mayor and the Nury Martinez led City Council will not heed this prudent advice.  Rather, they will raid the Reserve Fund, cut essential services to finance their pet projects, institute fee increases for Sanitation and other basic services, and ask us to approve tax increases to fund various inefficient services, including for the homeless, pleading poor mouth despite record revenues.   

Yes, there is trouble ahead, especially for Angelenos who are forced to live with the shenanigans of our corrupt City Council and our lame duck, ethically challenged Mayor.

 

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council.  He is a Neighborhood Council Budget Advocate.  He can be reached at:  [email protected].)