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LA WATCHDOG - Councilman Marqueece Harris-Dawson will inherit a “fiscal mess” when he becomes the President of the Los Angeles City Council on September 20th. The question is whether he will push to reform the City’s budget process and begin the process to eliminate its Structural Deficit, or will he continue to endorse the fiscally irresponsible ways of the past that have resulted and will continue to result in rivers of red ink and an increasing Service Deficit.
The City’s budget and finances are a “fiscal mess” because the City Council and the Mayor knowingly entered into budget busting labor agreements with the City’s politically powerful labor unions and relied on overly optimistic revenue projections. To “balance” this year’s budget that ends on June 30, the City raided the Reserve Fund for $387 million. And for the upcoming fiscal year that begins on July 1, the City eliminated around 1,700 vacant positions and cut back on vital services, including a $320 million cut in the Homeless Services and Housing Program, Mayor Bass’ signature initiative.
The City has very little financial flexibility. As of May 30th, the Reserve Fund’s balance was $261 million, $139 million below the minimum of $400 million, an amount equal to 5% of General Fund revenue of $8 billion. At the same time, the upcoming City budget will be under pressure to fund raises for the Fire Department, overtime for the Police Department, Liability Claims that are expected to exceed low ball budget of $87 million, and other unexpected expenses.
[Just imagine if we have a real emergency such as an earthquake or wildfires.]
As a first step, the City needs to develop a more realistic Four-Year General Fund Outlook that reflects the impact of future labor agreements. While the City Administrative Officer indicated that the City would be generating a surplus of $164 million in Fiscal Year 2028-29, this does not reflect the impact of future labor agreements with the police, firefighters, and civilian employees. If future raises for these employees were included, the deficit would be an estimated $211 million, a swing of $375 million.
Over the four-year period of 2025-26 to 2028-29, the Structural Deficit will be almost $900 million, an average of $225 million a year. This will result in an ever-increasing Service Deficit where our streets, parks, and sidewalks will not be properly maintained, and public safety will be compromised.
One simple, common-sense solution would be for the City to pass an ordinance, or better yet, a ballot measure, that would prohibit the City from entering into any new labor agreements that would cause a current or future deficit or result in a diminution of essential services. Importantly, the burden of proof would be on the City.
While this is a very simple solution, the City’s public sector unions would go ballistic since it may limit the increases in compensation that can extract from our elected officials whose campaigns they finance.
Will Council President Harris-Dawson act in a fiscally responsible way to eliminate the Structural Deficit or will he continue to kiss the rings of the union bosses?
(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].)
