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Sat, Jun

Budget Busting Labor Agreements to be Funded by Raiding the LA Reserve Fund

LA WATCHDOG

LA WATCHDOG - On May 26, Mayor Karen Bass approved the City’s $13.1 billion balanced budget for the Fiscal Year 2023-24 that begins on July 1.  At the same time, the City, operating through the Executive Employee Relations Committee (“EERC”), was negotiating new labor agreements with the City’s civilian workers whose contracts expire in December. 

The EERC consists of five members, Mayor Karen Bass, City Council President Paul Krekorian, and Councilmen Curren Price (President Pro Tempore), Bob Blumenfield (Chair of the Budget, Finance, and Innovation Committee), and Tim McOsker (Chair of the Personnel, Audits, and Hiring Committee).  Unfortunately, this powerful committee that has a major impact on the City’s budget and finances meets behind closed doors.  It also conducts its meetings with the campaign funding leaders of our public sector unions in secret.  So much for arms’ length negotiations conducted in an open and transparent manner.  

Although the City claims to have a balanced budget, it has not accounted for the impact of the new labor agreements that will kick in for the second half of the fiscal year beginning on January 1. While the cost of these new agreements is unknown, estimates are in the range of $50 to $75 million for the last six months of the fiscal year. 

Likewise, the impact on the City Administrative Officer’s Four-Year Budget Outlook is unknown, but in the past, surpluses have turned into deficits. 

According to the Fourth Financial Status Report prepared by the CAO, this shortfall will be funded by raiding the Reserve Fund.  While the City’s Reserve Fund is expected to be a healthy $570 million (7.2% of General Fund revenue) on July 1, this fund should be used for only emergencies such as earthquakes, pandemics, or recessions, not everyday operating expenses such as salaries.  

As a matter of policy, the City’s budget and its important Four-Year Budget Outlook do not include projections for future compensation adjustments.   But this policy needs to change.  Members of the City Council, the media, and all Angelenos need to have a better understanding of the City’s finances and any Structural Deficit or Surplus. Furthermore, any labor negotiations should be negotiated in an open and transparent manner involving public meetings before, during, and after the negotiations.  After all, it is our City and we have a right to know how our hard earned money is being spent. 

(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]. )

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