LA WATCHDOG - On Tuesday, Mayor Karen Bass presented her $7.86 billion General Fund budget to the City Council. This represents an increase of 5.6% over this year’s adopted budget of $7.45 billion, better than expected given the state of the economy and the housing market.
As for the Mayor’s number one priority, her budget allocates $1.28 billion to address homelessness in the City, of which $478 million is from the General Fund and the balance, $804 million, is from Proposition HHH, Measure ULA, and numerous grants.
As for Measure ULA tax on property sales of $5 million or more, the City is expecting an inflow of $672 million. Fortunately, the City is appropriating only $150 million from the House LA Fund because of the possibility of an adverse ruling in the pending litigation and the impact on future budgets if it devoted all the money in the upcoming year.
The City’s Reserve and Budget Stabilization are adequate despite transferring $115 million from the Reserve Fund to the General Fund, even if they are $30 million below the City Administrative Officer’s goal of $786 million, an amount equal to 10% of General Fund revenues.
There are, however, areas of concern.
For example, liability claims have consistently exceeded the budget amounts. Like last year, the budget projects payments of $87 million. Yet claims this year are expected to be almost $150 million, a difference of more than $60 million. How will this shortfall be funded?
There are also questions whether the City is allocating adequate resources to repair and maintain our streets, sidewalks, and parks, all of which have high levels of deferred maintenance due to underinvestment and neglect over many years.
Is the City providing the necessary funding to fill the many vacancies in the City’s employee ranks? This includes not only the police and fire departments, but many civilian workers, including the understaffed Department of Recreation and Parks that has been essentially downsized by the City’s “full cost recovery” program that was implemented in 2010.
We also need an explanation why the outlook for 2024-24 fiscal year has turned negative. Last year, the City was projecting a $191 surplus. Now that surplus has turned into a $13 million shortfall despite an increase in revenues of $240 million. Why?
What is not in the budget but was a highlight of the Mayor’s State of the City Address is the apparent willingness of the County, led by Supervisor and former City Councilwoman Janice Hahn, a Congressional colleague of Bass, to work with the City in addressing homelessness by providing the necessary mental health and substance abuse treatment. This is not an easy lift given the County’s bureaucracy and multiple health and social services departments. But it is a start.
Mayor Bass, her budget team, and the office of the City Administrative Officer have developed a credible, collaborative, and transparent budget, assisted by a nice increase in revenues. But knowing the City, there may still be skunks in the woodpile.
(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].)