27
Mon, May

LA’s Structural Deficit Begs Reform

LA WATCHDOG

LA WATCHDOG - “This year's process has uncovered a clear need for a reset of the City’s budgeting process – one that is honest, transparent and squarely focused on serving Angelenos.” Mayor Karen Bass  

At Monday’s press conference where Mayor Karen Bass introduced her Proposed Budget, City officials said the budget would be returning to a structural balance by fiscal year 2029.  Unfortunately, a balanced budget is not in the cards and the Structural Deficit will continue to impact the City’s already limited ability to provide essential services to Angelenos.    

The City’s Four-Year General Fund Outlook indicates that the City is looking at budget deficits aggregating $471 million over the next three years (2006, 2007, and 2028), an average of $157 million a year.  In fiscal 2029, however, the projected surplus of $86 million is used to support the claim of fiscal sustainability. 

The Budget Outlook once again fails to consider the impact of future labor agreements that, when factored into the projections, the $86 million surplus in 2029 turns into a deficit of almost $300 million.  

And while the Budget Outlook projects an average deficit over the next four years of almost $100 million, the shortfall, when adjusted for the new labor agreements, will increase to an average of an estimated $270 million a year, a swing of $170 million a year.  This will have a devasting impact on the City’s already strained resources, limiting services, ranging from the maintaining and repairing of our streets, sidewalks, and parks to providing interim and permanent housing for the homeless. 

As such, we can expect our fiscally irresponsible political establishment to call for increases in fees and taxes.  

A good first step to address the Structural Deficit is to follow up on Mayor’s Bass initiative to analyze the staffing, operations, efficiency, and finances of each of the City’s departments, followed by a program to implement any recommendations.    

Budgetary reforms are also necessary. This includes a prohibition on the City entering into any new labor agreements that cause deficits or a diminution of essential services.  The City will also need to adopt a policy of conducting open and transparent labor negotiations. Since these reforms will not be well received by the campaign funding leaders of City’s public sector unions, it will require the Mayor and City Council to use their political capital to implement these common sense reforms. 

Other reforms include the development and implementation of long-term infrastructure plan; policies that the Reserve Fund will only be used for emergencies such as earthquakes and pandemics, not to fund operational expenses; the use of multiyear budget as recommended by Controller Kenneth Mejia and the LA 2020 Commission; and the creation of an independent Office of Transparency and Accountability to review and analyze the City’s budget and finance in real time. 

Mayor Bass has called for the disruption of the status quo. Now is that time. Mayor Bass, please begin the resetting of the City’s budgeting process - one that is honest, transparent, and squarely focused on serving 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]. )

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