Torrents of Red Ink: Will Yaroslavsky and Harris-Dawson Support Real Budget Reform?

LA WATCHDOG - The City is awash in red ink, impacting the level of services that Angelenos deserve and expect. Witness our lunar cratered streets, our cracked sidewalks, our poorly maintained parks, and our underfunded police and fire departments. 

At the same time, our elected elites led by Mayor Bass, Council President Harris-Dawson, and Budget and Finance Chair Yaroslavsky have done little, if anything, to reform the dysfunctional budget process. 

For the fiscal year that ended on June 30, 2024, Controller Mejia indicated that there was a $600 million gap between the Adopted Budget and actual results. General Fund revenues were short by $221 million and over expenditures were $385 million. This shortfall was covered in part by raiding the Reserve Fund for over $300 million. 

For the current fiscal year, the Third Financial Status Report dated February 28 indicated that General Fund revenues may be more than $100 million below plan. Furthermore, over expenditures are in the range of $300 million, although the City may have “solutions” of around $200 million. Nevertheless, this leaves a shortfall of around $200 million. There is also strong likelihood that there will be additional expenditures associated with the wildfires.  Again, covering this shortfall may require the City to tap the already depleted Reserve Fund. 

For the upcoming fiscal year that begins on July 1, 2025, the “budget imbalance” is expected to be in the range of $250 million because of increased liability claims, impacts of new labor agreements, revenue short falls, and expenditures related to the wildfires.  

On April 20, the Mayor will submit her Proposed Budget to the City Council. It will no doubt have numerous “solutions,” many of which will be “creative,” that will close the “budget imbalance” which will result in lower level of services for Angelenos.  

With the Structural Deficit is projecting billions of red ink, once again it is time for Bass, Harris-Dawson, and Yaroslavsky to implement budget reform. This would require the City to live within its means, eliminate the Structural Deficit, and repair and maintain our infrastructure. Reforms would include: 

• Create a realistic Four-Year General Fund Budget Outlook that reflects the impact of future labor agreements.
• Develop a two-year budget as recommended by Controller Mejia.
• Create a robust Reserve Fund that can only be used in declared emergencies, not to balance the budget as is the current practice.
• Conduct open and transparent labor negotiations that require outreach to Angelenos before, during, and after the negotiations.
• Place a measure on the ballot that would prohibit the City from entering into any labor agreement that would create a current or future deficit.
• Develop a long-term infrastructure plan.
• Establish an independent Office of Transparency and Accountability to oversee the City’s budget and finances as recommended by the LA 2020 Commission. 

While these three musketeers may dismiss any reforms, Angelenos in turn should reject any efforts by the City to increase our taxes, whether it be through the issuance of bonds or the implementation of a parcel tax.

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