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LA WATCHDOG - The Charter Reform Commission has developed four focus groups: Planning and Infrastructure, Good Government, Government Structure, and Personnel. But what about the City’s recent billion-dollar fiscal crisis and its Structural Deficit that is expected to exceed $600 million over the next four years.
In June, the City passed a “resolution declaring a State of Emergency" based on fiscal circumstances resulting from decreased revenues and increased liabilities.”
Understandably so. As part of its efforts to eliminate a billion-dollar budget shortfall and to restore the Reserve Fund, the City is laying off 614 employees and eliminating 961positions. And even then, the City approved a budget that is not really balanced when considering the underfunding of liability claims, underestimated expenditures, inadequate reserves, and overly optimistic revenue projections because of the falloff in tourism, the impact of tariffs on the port, the lack of support from Washington, and the not so robust economy.
Next year, the City Administrative Officer’s Four-Year Budget Outlook is projecting a shortfall of $90 million, again based on optimistic revenues assumptions and underestimated expenditures. It does not include the necessary resources for public safety and the City’s infrastructure, the two core responsibilities of the City.
And over the next four years, the Structural Deficit is projected to be over $600 million when adjusted for future budget busting labor agreements beginning in 2027. And again, this is based on optimistic assumptions and does not include adequate resources for public safety (fire, police, and emergency management) and our failing infrastructure.
These shortfalls do not consider the City’s $10-15 billion deferred maintenance budget. This includes $5 billion for our streets and sidewalks, $2 billion for recreation and parks, $8 billion for compliance with the Clean Water Act, including $2.2 billion over the next three years, the necessary upgrades to its outdated management information systems, and the upgrading of the equipment and fleets of the Police and Fire Departments.
It also does not include the lowering of the unfunded pension liability of over $7 billion.
Nor does it include the City’s capital projects, including the Los Angeles River ($1.2 billion), the Convention Center ($2 billion), or the 5 million square foot Civic Center. Or the billions required to build and maintain permanent supportive and interim housing for the homeless. And what about the 2028 Olympics?
Given the City’s fiscal crisis, its Structural Deficit, and the billions in deferred maintenance, the City’s budget and financial condition should be the top priority for the Charter Reform Committee with the goal that the City must live within its means so that it can provide basic services to all Angelenos and avoid any future fiscal crisis.
(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)
