#  City’s Answer to Budget Crisis: Increased Short-Term Borrowings, Financial Flexibility

     Details    Jack Humphreville   ![logo](https://mail.citywatchla.com//templates/ja_teline_v/images/logo.png)         May 03 2021      [  ![](https://mail.citywatchla.com/images/stories/May-2021/035s.png)    ](https://mail.citywatchla.com/la-watchdog/21679-city-s-answer-to-budget-crisis-increased-short-term-borrowings-financial-flexibility)

  [LA WATCHDOG](https://mail.citywatchla.com/la-watchdog)   - [  Previous Article **Mayor Proposes Grand a Month for Low-Income Angelenos that Will Cost Billions the City Does Not Have** ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=21705:mayor-proposes-grand-a-month-for-low-income-angelenos-that-will-cost-billions-the-city-does-not-have&catid=12)
- [  Next Article **Your LA City Budget: Not Enough Red Ink Left in the Bottle!** ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=21663:your-la-city-budget-not-enough-red-ink-left-in-the-bottle&catid=12)

  ###### Typography

- [](# "Smaller Font")  ****Smaller** **Small** **Medium** **Big** **Bigger****  [](# "Bigger Font")
- [](# "Previous Font Style")  ****Default** **Helvetica** **Segoe** **Georgia** **Times****  [](# "Next Font Style")

- [ Reading Mode](# "Reading Mode")

> <a class="a2a_button_facebook"></a><a class="a2a_button_twitter"></a><a class="a2a_button_email"></a><a class="a2a_button_print"></a>[](https://www.addtoany.com/share)
>
>  [Comments](#disqus_thread)

>
>
>
> **LA WATCHDOG**-While the City is anticipating the cash infusion of $1.35 billion from the Federal government, the timing is uncertain, creating significant cash flow issues that must be addressed, especially in the upcoming fiscal year.

 The first installment of $677 million is expected within the next month or two, certainly no later than June 30, the end of the City’s fiscal year. These funds will be directed to the City’s Reserve and Budget Stabilization Funds, increasing their funding to over $800 million. This represents more than 12% of General Fund revenues, exceeding the City’s stated goal of 10%, making Paul Krekorian, the chair of the Budget &amp; Finance Committee and the long time champion of the Reserve Fund, a very happy camper.

The receipt of the second installment of $677 million is more problematic because it is expected within a year of the first tranche. This means that the payment could be received anytime between July and May, creating uncertainty and the need to plan accordingly.

As a result, the City is increasing the amount of its annual short term borrowings to an estimated $750 million, an increase of $300 million from last year’s borrowing requirements.

Every year, the City issues Tax and Revenue Anticipation Notes to finance its operations until December and January when property tax revenue begins to flow into the City’s coffers. By increasing the size of its short term borrowings, the City will have considerably more financial flexibility in case the Feds delay the cash infusion, unanticipated restrictions on the use of the Federal funds, revenues do not meet expectations, or there is some unexpected event. It also eliminates the need to raid the Reserve Fund.

At the same time, the City will also raise $1.33 billion to prepay its contributions to its two pension funds, saving over $25 million if the City made monthly payments.

These Notes will be amortized over the second half of the year from the surge in revenues from the property and business taxes and the transfer from the Department of Water and Power.

In July, the City will issue an estimated $2.05 billion in Tax and Revenue Anticipation Notes, about $300 million more than last year’s offering. While the extra borrowings will cost an estimated $3 million, it is more than justifiable because it gives the City the necessary flexibility to cope with uncertain timing of the cash infusions from Washington.

 *(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: lajack@gmail.com.)*

*-cw*

  - [  Previous Article **Mayor Proposes Grand a Month for Low-Income Angelenos that Will Cost Billions the City Does Not Have** ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=21705:mayor-proposes-grand-a-month-for-low-income-angelenos-that-will-cost-billions-the-city-does-not-have&catid=12)
- [  Next Article **Your LA City Budget: Not Enough Red Ink Left in the Bottle!** ](https://mail.citywatchla.com/index.php?option=com_content&view=article&id=21663:your-la-city-budget-not-enough-red-ink-left-in-the-bottle&catid=12)
<div data-id="1" 
	class="eb-inst eb-hide eb-emailform eb-1 eboxContentLocker"
	data-options='{"trigger":"onPageLoad","trigger_selector":"","delay":3000,"early_trigger":true,"scroll_depth":"percentage","scroll_depth_value":80,"firing_frequency":1,"reverse_scroll_close":true,"threshold":0,"close_out_viewport":false,"exit_timer":1000,"idle_time":10000,"close_on_esc":false,"animation_open":"slideInDown","animation_close":"fadeOutDown","animation_duration":400,"disable_page_scroll":true,"test_mode":false,"debug":false,"ga_tracking":true,"ga_tracking_id":"G-P16BQ7X1SW","ga_tracking_event_category":"EngageBox","ga_tracking_event_label":"Box #1 - Global Email Signup Form","auto_focus":false}'
	data-type='popup'
	>

	<button type="button" data-ebox-cmd="close" class="eb-close placement-outside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>
	<div class="eb-dialog eb-formVer" role="dialog" aria-modal="true" id="dialog1" aria-label="dialog1">
		
		<button type="button" data-ebox-cmd="close" class="eb-close placement-inside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>	
		<div class="eb-container">
						<div class="eb-content">
				
<form action="https://citywatchla.us2.list-manage.com/subscribe/post?u=34d69f33624fd058ee9b56516&amp;id=4bfa422f51&amp;f_id=00d6c2e1f0" class="eb" method="post" id="mcform-1" name="mcform-1" target="_blank">
			<div class="eb-form-header"><p><img src="/images/2023/06/be-a-city-watcher.png" alt="be a city watcher" width="350" height="97" loading="lazy" data-path="local-images:/2023/06/be-a-city-watcher.png"></p>
<p>Sign up to receive our special e-news blasts on Monday and Thursday evenings!</p></div>
	
					<div class="eb-field-row">

			
			
			
			<input class="eb-input" type="email" name="EMAIL"  placeholder="Email address"  id="EMAIL" value="" required>

			
		</div>
										
	<div class="eb-footer">
    	<button class="eb-btn" type="submit" name="subscribe" style="background-color:rgba(93, 183, 93, 1);color:rgba(255, 255, 255, 1)">
    		Sign up    	</button>
    </div>
</form>			</div>
		</div>
	</div>	
</div>
<div data-id="3" 
	class="eb-inst eb-hide eb-yesno eb-3 "
	data-options='{"trigger":"onScrollDepth","trigger_selector":"","delay":0,"early_trigger":false,"scroll_depth":"percentage","scroll_depth_value":80,"firing_frequency":2,"reverse_scroll_close":false,"threshold":0,"close_out_viewport":false,"exit_timer":1000,"idle_time":1000,"close_on_esc":false,"animation_open":"fadeInUp","animation_close":"fadeOut","animation_duration":300,"disable_page_scroll":false,"test_mode":false,"debug":false,"ga_tracking":true,"ga_tracking_id":"G-P16BQ7X1SW","ga_tracking_event_category":"EngageBox","ga_tracking_event_label":"Box #3 - Yes \/ No Donation Popup Box","auto_focus":false}'
	data-type='popup'
	>

	<button type="button" data-ebox-cmd="close" class="eb-close placement-outside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>
	<div class="eb-dialog " role="dialog" aria-modal="true" id="dialog3" aria-label="dialog3">
		
		<button type="button" data-ebox-cmd="close" class="eb-close placement-inside" aria-label="Close">
	<img alt="close popup button" />
	<span aria-hidden="true">&times;</span>
</button>	
		<div class="eb-container">
						<div class="eb-content">
				
<div class="ebox-yes-no">
	<div class="ebox-yn-text">
		
		
		<div class="ebox-yn-headline" style="font-size:22px;color:#888888">
			<p>If you only give once a month, would you consider giving to CityWatch?</p>
<p>Your support fuels our mission to promote and facilitate civic engagement and neighborhood empowerment, and to hold area government and its politicians accountable.</p>
<p>Would you like to help? Even if you can only give $5, it will make a difference.</p>		</div>
			</div>
	
	<div class="ebox-ys-buttons" style="font-size: 16px;">
		
<a
					data-ebox-prevent="0"
		data-ebox-cmd="close"
				target="_self"
		href="https://www.citywatchla.com/donate"
		rel="noopener"
	
	
	
	
	class="ebox-ys-btn"
	style="background-color:#2ec664;color:#ffffff;min-width:100px">
	Yes
	</a>
<a
	
	
			data-ebox-cmd="close"
		href="#"
	
	
	class="ebox-ys-btn"
	style="background-color:#ef2345;color:#ffffff;min-width:100px">
	Not Right Now
	</a>	</div>

	</div>			</div>
		</div>
	</div>	
</div>