Los Angeles’ $700 Million Budget Deficit

Congrats to Los Angeles.  They are admitting to a $700 million deficit.  I bet by the time they fix the budget, it is closer to one billion dollars.  At the same time there is a crime wave.  To stop that the City Council took $150 million from the police budget—great news for the criminals.  Another reason for families and firms to flee L.A., for their own survival.

“The primary cause of this deficit is the shortfall in City revenues caused by the impact of COVID-19.  While the City Administrative Officer indicated that revenue would be off by $400 million to $600 million, we believe that the revenue gap may exceed $600 million given the current run rate and the City’s optimistic budget projections that assume a return to “normalcy” in January of 2021. 

The City is also projecting “over-expenditures” of almost $120 million, in large part because the City is operating from a budget that incorporates furloughs that have not been implemented. These furloughs were how the City intended to pay for the unsustainable labor agreements that they approved in October of 2019.        

Gee, killing hundreds of thousands of jobs, closing tens of thousands of businesses, of course you will have massive revenue loss.  This is a dying city—and an unsafe one.  Go to L.A. at your own risk.

Los Angeles’ $700 Million Budget Deficit

Budget Advocates, City Watch LA,  11/16/20 

NEIGHBORHOOD POLITICS-The Neighborhood Council Budget Advocates are dismayed that Mayor Eric Garcetti and the LA City Council have not developed or implemented a plan to eliminate the estimated $700 million “gap” in this year’s budget that ends on June 30.

The primary cause of this deficit is the shortfall in City revenues caused by the impact of COVID-19.  While the City Administrative Officer indicated that revenue would be off by $400 million to $600 million, we believe that the revenue gap may exceed $600 million given the current run rate and the City’s optimistic budget projections that assume a return to “normalcy” in January of 2021. 

The City is also projecting “over-expenditures” of almost $120 million, in large part because the City is operating from a budget that incorporates furloughs that have not been implemented. These furloughs were how the City intended to pay for the unsustainable labor agreements that they approved in October of 2019.        

Since Garcetti’s Safer at Home Emergency Order in March, the City has done little to offset the larger than expected loss in revenue. In September, the Mayor directed City departments to reduce expenditures by 3%, evaluate layoffs, work with the City’s Labor Partners to renegotiate salary increases, maintain the hiring freeze, and evaluate the transfer of City employees to the Special Funds. Little has been accomplished.  

Councilman Paul Krekorian, the chair of the Budget and Finance Committee, said the City will need to take drastic and draconian actions, including jettisoning non-core services in their entirety, renegotiating labor agreements, and instituting “massive” furloughs and layoffs in order to eliminate this $700 million deficit over the next seven months. 

We expect the CAO to issue the Second Financial Status Report in early December which will contain his recommendations and plans. It will not be pretty. We will keep you updated. 

(The Budget Advocates is an elected, all volunteer, independent advisory body charged with making constructive recommendations to the Mayor and the City Council regarding the Budget, and to City Departments on ways to improve their operations, and with obtaining input, updating and educating all Angelenos on the City’s fiscal management.) Prepped for CityWatch by Linda Abrams.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. This is what happens when you put incompetent people in office. California doesn’t have anyone in government that could operate a toll road at a profit.

  2. Krekorian is right to be upset. The collapse of the City and the abrogation of paying rent means that developers dont want to build here. That is a HUGE problem for him as he makes his money by requiring developers to use his father’s lobbying firm to have Krekorian make the zoning modifications they are required to have to build the developments! Krekorian is losing millions of $$ a year!

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