Legislative News from CD5's Jeff Ebenstein: City facing $675 million shortfall
This is an excerpt reprint from Councilmember Paul Koretz’s e-newsletter of Jeff Ebenstein’s column. To sign-up for Councilmember Paul Koretz’s e-newsletters, click here.
The City is facing a $675 Million revenue shortfall until the end of the fiscal year. Combined with cost overruns in departments, the deficit the City has to confront and solve for is over $700 Million. This could arguably be the worst financial scenario the City of Los Angeles has faced since the Great Depression.
This week the Budget Committee, on which Councilmember Koretz sits, and the LA City Council met to hear reports from the CAO and all of the City Department General Managers to consider the impacts that necessary cuts and potential furloughs and/or layoffs will have on city services. This week’s actions revolve around a mandated 3% expenditure cut for all departments, inevitably straining each department’s ability to provide the level of services to the public that we all want to see. In addition, they call for looking in every nook-and-cranny of the City Budget to find possible savings which can free up funds to cover other higher priority costs.
Almost every source of revenue the City depends upon - from sales and property taxes to parking revenues to transient-occupancy taxes - have been clobbered by the drop-off in economic activity created by the COVID-19 crisis. At the same time, the City has stepped up to provide help to tenants, landlords, businesses, and persons experiencing homelessness during the pandemic, with only some of the expenses being reimbursed by the county, state or federal governments. Federal stimulus funds and further concessions from our City labor partners would definitely help our situation.
Moreover, there are critical services in every department from the Department of Aging to housing and homeless services to the LA Fire department where cuts will directly affect our residents and are critical to the well-being of the City.
Despite the cuts that will have to inevitably be made, public safety remains Councilmember Koretz's top priority. This is why he introduced a motion during the budget debate in Council to exclude LAPD personnel from being even considered for layoffs, especially at a time when we are at our lowest level of sworn officers since 2008. Please note that $150 million has already been transferred out of the LAPD budget last summer. The City Council rejected my motion. However, the Budget & Finance Committee DID vote to reduce the potential number of layoffs for LAPD sworn officers and civilians from nearly 1700 to 355 sworn officers and 278 civilian employees. The Councilmember remains committed to reducing both numbers to zero.
At the conclusion of the debate by the Council, Councilmember Koretz joined his Council colleagues in voting to adopt a Financial Status Report that sought to address the $675 Million revenue shortfall by curbing spending, cutting services, dipping into reserves.
Among the changes were:
A hard hiring freeze;
$81 Million in spending reductions;
authorization to dip into the City’s reserves (the entire Budget Stabilization fund and the entire Contingency Reserve account) up to $259 Million;
authorization to borrow to cover day-to-day costs for city services up to $150 Million;
transfers from other accounts like the Coronavirus Relief Fund to reimburse the General Fund for previously incurred Coronavirus response expenses; and,
to negotiate potential cutbacks to employee pay.
Special thanks to CAO Richard Llewellyn and Budget Chair Paul Krekorian for their leadership in these efforts.