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Mon, Jun

Is the Budget Really Balanced?

LA WATCHDOG

LA WATCHDOG - At a recent meeting of the Budget, Finance, and Innovation Committee, we learned that the Mayor’s Proposed Budget did not take into consideration the impact of any new labor agreements with the City’s civilian unions whose contracts expire in December. 

New labor agreements are very costly.  In October of 2019, the City gave away the store when it entered into new labor agreements with the civilian unions that blew a $100 million hole in the current year’s budget and turned a four year budget surplus of $200 million into a cumulative deficit of $1.2 billion over the following four years. Overall, this resulted in a $1.5 billion hit to the City’s finances.   

So no, we do not have a balanced budget when factoring in the new labor agreements.  

There are other areas of the Proposed Budget that need to be addressed.  

The budget projects Liability Claims of $87 million, but this amount is significantly less than the $150 million that the City is expected to pay this year.  It would be prudent to increase this budget line item since there is an epidemic of runaway juries hitting us and other deep pockets up for outrageous judgements. 

Every year, the Financial Status Reports issued by the City Administrative Officer outline over expenditures, especially for the Police and Fire Departments.  Does the budget make allowances for these over expenditures by increasing the budget line items or establishing appropriate reserves?  

The City is also planning to hire new employees to fill its many vacant positions, including police officers, paramedics, firefighters, and other civilian support staff.  But does the budget provide enough resources to meet the City’s hiring goals, not only for the Police and Fire Departments, but other civilian departments?    

The City has not developed a plan to repair and maintain our streets, sidewalks, and parks as well as the City’s buildings, facilities, and management information systems. This is just another case of kicking the can down the road.  

Fortunately, the City has reserves equal to almost 10% of the General Fund budget of $7.86 billion, or $756 million, of which $560 million is in the Reserve Fund.  While these reserves are for emergencies (earthquake, pandemic, recession), they may be a tempting target for the public sector unions during labor negotiations, as was the case in the recent labor negotiations involving LAUSD.  

To protect its financial integrity, the City would be wise to develop a policy of transparent labor negotiations modeled on versions of the Civic Openness in Negotiations ordinances that have been adopted by other California cities and counties.  This would include public hearings at the beginning of negotiations, an independent financial analysis of any new contract, and ample time for Angelenos to ask questions and raise concerns. This course of action has even been endorsed by the Los Angeles Times

Mayor Bass, her budget team, and the CAO have developed a credible budget.  But there needs to be several adjustments, especially when it comes to the labor negotiations.  We cannot afford to once again give away the store to the public sector unions. 

 

(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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