Where are the Needed Reforms in the Bass Budget?

LA WATCHDOG - The Mayor’s State of the City address contained many platitudes, many of which we have heard before.   There were, however, no details on how the City will clean up its act. We do not need another fiscal crisis where there is another $1 billion shortfall that requires cuts in essential services and layoffs of City civilian employees. 

Underlying this self-inflicted fiscal crisis were the budget busting labor agreements that were approved by Mayor Bass, former Budget and Finance chair Bob Blumenfield, and the rest of the City Council.  This resulted in overly optimistic revenue projections and underestimated expenditures, including low balling liability claims related to legal settlements and judgements.  

The Mayor’s Proposed Budget that was submitted to the City Council is theoretically balanced.  This will require additional review and analysis to determine whether it is truly balanced and provides adequate services to Angelenos.

One area that requires review is the projected $187 million in liability claims, especially when compared to this year’s estimate of $289 million.  Other areas include, but not limited to, the impact of the layoff of civilian employees and lower level of services, the pavement preservation program that results in 10% fewer repairs, the $50 million reduction in the homeless service and housing program budget, the Reserve Fund balance, and the increase in the hits to the budget of Recreation and Parks. 

What was not addressed are the necessary budget and financial reforms that are needed so that the City will live within its means.  We cannot afford another fiscal crisis where it must beg the fiscally stressed State for a bailout. Of course, a bailout of the City would be a bad precedent for the State because it would be obligated to fund other profligate entities, including the City of San Francisco, LAUSD, and BART (Bay Area Rapid Transit). 

While the Budget Advocates made seven common sense reforms, the most pressing one is for the City to develop a realistic Four-Year General Fund Outlook.  The newly released forecast anticipates an optimistic growth in revenues of around 4% per year and a surplus of over $450 million for the fiscal year 2029-30. But this projection does not consider any future labor agreements with City’s civilian and sworn employees. And since personnel expenditures represent over 75% of the City expenditures, neglecting any increases borders on negligence if not fraud.   

Even more so, by relying on the flawed Outlook, the Mayor and the City Council will fail to address the City’s fiscal problems, again kicking the budget can down the road.

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The following are the Budget Advocates seven recommendations for reform which may be implemented if the Mayor and the City Council use their political capital and stand up to the campaign funding union bosses. 

1. The Four-Year General Fund Budget Outlook needs to be updated to reflect anticipated raises for City employees.  Personnel costs comprise about 75% of the City’s expenditures. This will give the Mayor and the City Council a better understanding of the City’s budget, finances and its Structural Deficit.  

2. Develop a two-year budget as recommended by the City Controller and the LA 2020 Commission.  

3. Conduct open and transparent labor negotiations that require significant outreach to Angelenos before, during, and after the negotiations.  

4. 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. In the short term, pass an ordinance.  

5. Develop a long-term infrastructure plan to address deferred maintenance and future capital expenditures.  

6. Create a robust Reserve Fund that can only be used in declared emergencies, not to balance the budget as is the current procedure.  

7. Establish an Office of Transparency and Accountability as recommended by the LA 2020 Commission to oversee the City’s budget and finances in real time. 

(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].)