Bleak Budget Realities Require Transparency

LA WATCHDOG - In a recent article in The Daily News, a city official was quoted as being “cautious about the City’s financial outlook amid falling revenues and global trade uncertainty.” The City is also projecting a “structural balance” in two years and significant surpluses for the fiscal years ending in June of 2029 and 2030. 

Unfortunately, this optimism does not reflect reality.  Rather, it is time for the Budget and Finance Committee to request the City Administrative Officer to update its Four-Year Budget Outlook to reflect the current economic conditions and the impact of future labor agreements, higher liability claims, and lower revenues. 

This year’s budget is most likely to be in the red by $100-200 million because of lower-than-expected revenues, higher liability claims than projected, and other over expenditures such as police and fire department overtime.  This will put significant pressure on the Reserve Fund, which is already at minimally acceptable levels. 

The Four-Year Budget Outlook projects a four year (2027-30) cumulative surplus of almost $600 million.  But when the Outlook is adjusted for a series of new labor agreements for the sworn and civilian employees beginning in 2027, the surplus evaporates and results in a shortfall of over $600 million.  And this is based on optimistic revenue assumptions and underestimated liability claims. 

These shortfalls, including next year’s shortfall of $91 million, will be addressed by corrective measures which will most likely involve cuts in essential services (including public safety and the repair and maintenance of our streets, sidewalks, and parks) and layoffs and furloughs.  

Rather than relying on my assumptions and analysis, the Budget and Finance Committee, its newly established Advisory Group, and the CAO, with the participation of the Neighborhood Council Budget Advocates, need to develop a realistic assessment of the City’s budget and finances over the next four years, warts and all. At the same time, the Committee should develop a series of recommendations for meaningful budget reform that can be placed on the ballot.  

More than likely, our elected officials will try to increase our taxes and fees to balance the budget and address the City’s deferred maintenance budget that exceeds $10 billion. But without real meaningful reform that eliminates the Structural Deficit and the continuing fiscal crises, why would Angelenos approve any ballot measures that would increase our taxes?  

(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)