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LA WATCHDOG - In a recent email to her constituents, Councilwoman Katy Yaroslavsky, the new Chair of the City Council’s Budget and Finance Committee, indicated she was “focused on both the immediate and long-term financial health of the City. That means tackling this year’s budget shortfall responsibly while also pushing for broader reforms like shifting to a multi-year budgeting framework, stabilizing our Reserve Fund, properly accounting for long-term financial obligations, and restructuring city services to make them more efficient and effective, among others. The decisions we make now will shape Los Angeles for years to come.”
Will Yaroslavsky lead the efforts to create a balanced budget based on reasonable assumptions? Will she promote reform to eliminate the Structural Deficit that results in a torrent of red ink over the next decade so the City can live within its means and provide essential service to Angelenos? Or is this more barnyard chatter?
According to The Times, the City is broke. Why? The City under Mayor Karen Bass has agreed to unsustainable budget busting labor agreements with the City’s public sector unions. To show a balanced budget, the City’s budget wizards relied on overly optimistic revenue projections and underestimated departmental expenditures, put their head in the sand regarding an explosion in liability claims related to legal settlements and judgments, and shortchanged the maintenance and repair of our infrastructure.
As a result of a $600 million variance from plan for the fiscal year that ended in June of 2024 and an anticipated deficit of over $400 million in this current fiscal year, the depleted Reserve Fund is $300 million below City guidelines when all over-expenditures and revenue shortfalls are considered. This will require the City to declare a “fiscal emergency,” a politically embarrassing statement highlighting the negligence of the Mayor and City Council. And in the upcoming fiscal year that begins in July, the “budget imbalance” is over $400 million according to the City Administrative Officer.
The first order of business is to balance the upcoming budget. More than likely, Mayor Bass and her teams will rely on a series of financial shenanigans that are less than transparent. But the job of Yaroslavsky is to create a truly balanced and transparent budget that does not rely on unsound gimmicks.
At the same time and in the future, Yaroslavsky needs to address needed reforms that have been recommended over the years by the Neighborhood Council Budget Advocates, Controller Kenneth Mejia, and the LA 2020 Commission. Reforms include:
- Create a realistic Four-Year General Fund Budget Outlook <https://www.citywatchla.com/la-watchdog/30072-does-budget-finance-chair-katy-yaroslavsky-support-fraud-or-transparency> 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 in real time as recommended by the LA 2020 Commission.
Will Yaroslavsky address these needed reforms? Will she work with the Neighborhood Council Budget Advocates and others who are calling for budget reform? Will she work with her fellow Councilmembers to promote common sense reform? Will the politically ambitious Yaroslavsky confront the City’s political establishment and the campaign funding labor union bosses?
Mayor Bass will submit her Proposed Budget to the City Council on April 20th. Will Yaroslavsky be a friend or foe of Angelenos?
(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].)
