Mayor Bass releases proposed budget effort to close $1 billion shortfall.
LOS ANGELES MAYOR Karen Bass spoke of the shortfall in the city budget.
By A. Johnstone
As was announced last month, the city is facing a major shortfall in our budget for the upcoming fiscal year. On a Zoom webinar this morning with Mayor Karen Bass’ staff, the office disclosed that much of the budget gap was the result of lower revenues than were previously projected and higher overall costs, particularly liability costs. According to the mayors’s office, unlike many other large cities, Los Angeles only receives roughly 35% of the city revenue from property taxes, which is customarily the most stable source of revenue for cities. Deputy Mayor of Finance, Matt Hale, said, “…revenues are highly sensitive to swings in the economy.” Hale said there has been a “slowing” of business tax, sales tax and hotel tax.
The mayor’s office presumed a projection of $8.14 billion in receipts, and the true number was just over $8 billion. The increased costs were partly due to liability payouts that for the last 10 years have averaged $100 million and have ballooned to over $300 million, according to the mayor’s office. When asked why it had jumped, the response was that claims have gotten bigger because juries are awarding bigger judgments, and in cases with injuries, the cost of health insurance has also risen.
To balance the budget, there will be a combination of reductions or elimination of several agencies; layoffs. There are ongoing negotiations with Sacramento to receive additional funding. Of the 1,600 layoffs, none will be in the Los Angeles Police Department or Fire Department. In fact, in the proposed budget, the LAFD will see an increase of 12.7%. Mayor Bass has been in active discussions with the respective labor unions to discuss the worsening economic outlook and how we can weather the forecasted storm. The mayor’s office said the budget will slightly decrease the funding for some of the homeless initiatives, but it will “…continue to be a focus.” According to Hale, the most critical thought that went into this proposed budget was to continue to maintain the city’s reserve funds at 6%—leaving over $200 million in the stabilization fund to “brace us” for instability that might emanate from Washington.
“Change,” the theme for the upcoming year, will be to handle the crisis that the city faces by embracing change. There will be a focus on rebuilding after the fire disasters and preparing the city for the Olympics. Mayor Karen Bass is asking all Angelenos to come together in celebration of different neighborhoods; see our coverage on the mayor’s State of the City for details on the plans for the future.
Category: News
