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Sun, Nov

Magician Garcetti will Need Some Sleight of Hand to Balance LA's New Budget!

LA WATCHDOG - On Wednesday, April 20, Mayor Eric Garcetti will submit his ninth and final budget to the City Council. 

But how will Garcetti balance the budget given the Structural Deficit and the call for additional funds to fund initiatives outlined in his State of the City speech? 

In March, Controller Ron Galperin’s Revenue Finance Report projected General Fund revenue of $7.1 billion for the upcoming fiscal year that begins on July 1.  However, expenditures for this fiscal year are expected to be $7.5 billion. This represents a “budget gap” of $400 million. 

Underlying this shortfall is that the City will not have the benefit of $725 million in one-time money from the American Rescue Plan ($640 million) and the Reserve Fund ($85 million). 

This budget gap is expected to increase.  City employees will be able to recoup deferred salary increases.  New labor agreements will result in increased compensation.  And most of the City’s 39 departments are asking for more money.  

In his 52-minute State of the City speech on Thursday, Garcetti acknowledged that the City is a “mess.” Sanitation will require additional resources to make the City the cleanest big city in America.  

The LAPD is requesting a $213 million (12%) increase in funding to make LA the safest big city in America.  This will no doubt send the “defund” proponents into orbit.   

Garcetti also said that additional money will be needed for homeless and affordable housing, climate change, the City’s infrastructure, and many other initiatives, including his Guaranteed Basic Income pet project.    

How will Garcetti balance the budget without raiding the City’s Reserve Fund?  Will Garcetti and the City Council approve new budget busting labor agreements as they did in late 2019?  Will there be layoffs and furloughs? Will there once again be a reduction in City services?  

Stay tuned.  On Wednesday morning, the Mayor will submit his proposed budget to the City Council.  It will not be pretty.  

 

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[Note: General Fund revenues have increased by over $2.5 billion during the Garcetti administration.  Yet, despite this 56% increase in revenues, our City’s budget is a mess. The City will once again raid the Reserve Fund.  The City is once again creating a Structural Deficit where expenditures are increasing faster than revenues. Will our next mayor be fiscally responsible or is it that too much to ask?]

 

(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].)