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LA WATCHDOG - Mayor Bass’ Proposed Budget benefitted from an unexpected 5.4% million increase in General Fund revenue. This $442 million surge offset the anticipated $263 million shortfall outlined by the City Administrative Officer in late March. Unfortunately, this “treading water” budget did not address the City’s Structural Deficit where expenditures continue to growth faster than revenues.
The Four-Year General Fund Budget Outlook prepared by the CAO indicates that there will be a $187 million deficit next year (2027-28). In three years, the Outlook projects a surplus in 2030-31 of more than $100 million, erasing the Structural Deficit.
Not so fast.
If the Outlook is adjusted for more realistic increases in employee compensation for sworn and civilian employees, this surplus evaporates and turns into a deficit of almost $300 million. And over the four-year period, the cumulative shortfall increases by over $1 billion, from a cumulative deficit of $100 million to $1.1 billion in the red.
The Proposed Budget does nothing to address the Structural Deficit and needed financial reforms. Nor does it address the billions in deferred maintenance of our streets, sidewalks, parks, street lights, and the rest of our deteriorating infrastructure.
The current strategy of the Mayor and the City Council is to continue to “kick the can down the road” by increasing taxes and holding Angelenos hostage, threatening public safety and our infrastructure if this series of one-off taxes are not approved.
The City is currently in the process of asking property owners to approve a doubling of the Street Light Assessment that will be used to repair and maintain our neglected street lights, improving public safety.
In June, the City has placed three measures on the ballot that will increase General Fund revenue by an estimated $125 million IF approved by the voters. Two involve the transient occupancy (hotel) tax and one taxes unregistered pot shops.
In November, the City is considering placing four tax raising measures on the ballot that will yield $400-500 million IF approved by the voters: a delivery tax (DoorDash), a shared ride tax (Uber), a 6% ticket tax on large venues, and a vacancy tax.
The Mayor also supports the proposed half cent increase in our sales tax to fund the Fire Department which, along with the County sales tax proposal that is on the June ballot, would increase our sales tax to 10.75%.
Before we approve any new taxes that allow the City to continue its profligate ways, we need to demand real budget reform that eliminates the Structural Deficit. Reforms include open and transparent budget negotiations, no new labor agreements that create a deficit, a real reserve fund for emergencies only, and an independent office to review the city’s budget and finances in real time.
Will the Budget and Finance Committee address the reforms needed to eliminate the Structural Deficit? Or will the City’s future be dictated and constrained by the Structural Deficit?
(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 lajack@gmail.com.)
