Structural Deficit Is Eating Our Lunch

LA WATCHDOG - What is Katy Yaroslavsky’s Budget and Finance Committee plan to address the City’s Structural Deficit that is crowding out the City’s core responsibilities of public safety and the repair and maintenance of the City’s infrastructure, including our lunar crater streets, cracked sidewalks, and poorly maintained parks? 

Will the City Council follow up on Yaroslavsky’s motion to “establish an Advisory Group to assess the City’s financial status and advise the Budget and Finance Committee on steps to secure the long-term fiscal health of the City?” 

Will the not so independent Charter Reform Commission address the City’s Structural Deficit and its dysfunctional budget process and propose meaningful charter reform?

The City is under the delusion that there is not a Structural Deficit based on its Four-Year General Fund Budget Outlook that projects a budget surplus of over $450 million in Fiscal Year 2029-30.  But when adjusted for new labor agreements that will take effect in 2027 (and we all know that the campaign funding union bosses never walk away from the bargaining table empty handed), that surplus turns into a shortfall of around $125 million.  

And this does not include adequate resources for the Reserve Fund, the repair and maintenance of our deteriorating infrastructure, the proper funding for liability claims for legal judgments and settlements, clean water compliance, pension reform, or any capital projects such as the LA River, the Convention Center, or the Civic Center. 

It also assumes optimistic revenue projections and no economic downturn. 

The Budget Outlook has been flawed in the past.  In 2022, the surplus was projected for this fiscal year (2026) to be $308 million.  In 2023, $470 million. In 2024, $290 million.  In 2025, a projected shortfall of $56 million.  In reality, the shortfall was $1 billion, creating a fiscal crisis that resulted in layoffs and compromised public safety. 

Will the Budget and Finance Committee, the City Council, and the Mayor continue to ignore the Structural Deficit where spending is out of control?  Or will they confront the Structural Deficit so that the City can eventually live within its means and provide core services to all 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])