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 [ LA WATCHDOG ](https://mail.citywatchla.com/index.php?option=com_content&view=category&id=12)

#  Budget Transparency Needed Because of Projected Deficits

January 22 2024

Written by Jack Humphreville.

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LA WATCHDOG - Shortly after the Mayor and the City Council approved a five year, 24% budget busting raise for the City’s civilian employees, the City Administrative Officer issued a memo, Fiscal Concerns and Prioritization of [Critical Hiring](https://cao.lacity.gov/budget/20240119%20CAO%20FISCAL%20CONCERNS%20AND%20PRIORITIZATION%20OF%20CRITICAL%20HIRING.pdf),, on January 19 indicating that General Fund revenues through December were $158 million below plan. At the same time, overspending was $143 million, and this is after $154 million in actual ($43 million) and potential ($111 million) savings.

This has created a shortfall of over $300 million for this fiscal year that ends on June 30. This assumes that there will not be an economic downturn. Even after corrective actions, it appears that the City will have to raid the Reserve Fund to balance this year’s budget, reducing it to dangerously low levels.

For the next fiscal year that begins on July 1, the CAO expects a budget gap of between $350 million and $400 million. This will require the City to raid the Reserve Fund once again, possibly reducing the levels to below the desired minimum of $385 million, an amount equal to 5% of the General Fund budget.

Corrective actions will have a significant impact on City employees since personnel costs comprise the major portion of the budget. This will result in limitations on hiring new employees, including those in critical positions, the elimination of unfilled vacant positions, and possible furloughs and layoffs. At the same time, City services are already suffering because there is a vacancy rate of 19%.

There are also questions on how the Mayor intends to fund her ambitious Homeless Services and Housing Program which is budgeted to spend $1.3 billion this year. Will the City be able to replicate its $250 million one-time expenditure that it made this year? How will it replace the $261 million in Proposition HHH money now that all of $1.2 billion has been allocated. Will it be able to rely on the Measure ULA taxes on sales of property of $5 million that are currently restricted because of litigation opposing this new tax?

There is also the question of how to fund the $7 billion needed for our neglected streets, sidewalks, and parks.

One of the CAO’s solutions to eliminate the projected budget deficits is to increase taxes. These would need to be approved by the voters. As it is, the City is considering a ballot measure to authorize the issuance of new bonds to finance permanent and interim housing for the homeless. The County is also considering increasing the Measure H quarter of cent sales tax that is due to expire in 2027 to a permanent half cent sales tax.

But these funds would be for the Mayor’s homeless initiatives and not for the General Fund.

Rather than keeping us in the dark until April 20 when the Mayor is required to submit her budget to the City Council for its consideration, Mayor Bass and the Paul Krekorian led City Council, along with the CAO, should hold open and transparent hearings across the City to update Angelenos on the upcoming budget crisis.

*(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: <lajack@gmail.com>.)*

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