In a recent report, Los Angeles’s Chief Administrative Officer has presented his view that the City’s budget has approached a crossroads. One-time fixes are exhausted or nearly so, and the continuation of recent improvements in City operations and face a dubious future.
One step that could be taken, in the opinion of CAO Miguel Santana, is for voters to approve the half-cent sales tax measure, Measure A, that will appear on next month’s ballot. The increase of about $215 million per year would be enough to support ongoing support for approximately 500 police officers, the rebuilding of the city’s Budget Stabilization Fund, and bring the City closer to the “light at the end of the tunnel.”
But approving new revenues, Santana notes, will not guarantee long-term fiscal health in Los Angeles. Regardless of voters’ attitudes towards Measure A, the City and its leaders must adopt a strategic plan that would provide guidance for a decade or more, and still be “nimble” enough to adapt to changing economic conditions.
A ten-year plan must be developed in the light of the past four-years of hard decisions and cuts, where the City trimmed 5,400 positions, and nearly a billion dollars in expenses.
According to Rick Orlov’s article, Los Angeles Mayor Antonio Villaraigosa pointed to the CAO report as proof that the city has made progress in recent years.
“The CAO’s report highlights the tremendous progress we have made toward eliminating our structural deficit while at the same time maintaining core municipal services and public safety,” Villaraigosa said.
Santana points out that some of those gains could be permanently extended should the Council continue to embrace a strong political will. During the next 36 months, all the City’s employee contracts will open up for renegotiation.
“Will future policy makers learn from the mistakes of the past by asking: Is this new hiring program, labor contract, tax, relief measure, or restoration of services sustainable?” writes Santana. “Or will they simply rebuild the city back to where it was four years ago, vulnerable to the next economic downturn, multi-million dollar lawsuits, or reduction in state and federal funding?”
Holistically, Santana paints a picture of difficult choices and responsible leadership in the City, which has had to trim about $1 billion from its budget since 2009. Over that same period of time, the employee compensation costs (including healthcare, pensions, and other fixed costs) increased by 21 percent. But pension reform adopted by the City has begun to pay dividends.
“Latest projections from the pension systems how that reforms are starting to bear fruit, resulting in a projected pension contribution that will be $45 million less than what it had been projected just one year ago.”