LA Daily News: L.A. deficit makes it a time for caution: Editorial

Posted on March 24, 2017

 

Los Angeles City Hall is framed by the facade in front of the Caltrans building in a file photo. (Photo by John McCoy/Southern California News Group) 

 

By The Editorial Board, LA Daily News

Years removed from the Great Recession, a Los Angeles city budget deficit inspires less fear than revulsion, less sympathy for the leaders who must fix it than disappointment in them for letting it develop.

No, the city isn’t in a full-on crisis like the half-billion-dollar budget shortfall that followed the recession. But this is a big problem, and solving it may get harder before it gets easier.

“This” is the $224 million budget deficit forecast for the 2017-18 fiscal year in a March 16 report from interim City Administrative Officer Richard Llewellyn Jr. — about $140 million worse than forecast in January. The new deficit forecast amounts to about 4 percent of the city’s general fund. 

The cause isn’t an overall drop-off in revenue, which is on the rise, if more slowly than hoped, according to a March 1 forecast by City Controller Ron Galperin. The cause is increases in spending.

The city administrative officer’s report attributes the sudden rise in the projected deficit to new labor deals, a lawsuit settlement over disabled access in public housing, other increasing legal-liability costs, and commitments to spending to fight homelessness.

The worries don’t end there. The city’s reserve fund, at $277 million, is reported to be below the 5 percent-of-budget target, leaving no easy out. And another legal blow looms in class-action suits against the Department of Water and Power, challenging the constitutionality of the DWP Revenue Fund transfer to the city (expected to be $264.4 million for 2016-17) and the legality of electricity rates. Then there’s the possibility federal funds will be withheld from cities clashing with the Trump administration over immigration enforcement.

As Mayor Eric Garcetti prepares to propose a budget in April, “the city must identify new and expanded revenue sources and find ways to curtail spending,” Galperin wrote.

Indeed. Residents expect better services on basics like streets, sidewalks and trees. Those must continue to take higher priority.

L.A.’s predicament makes it all the more remarkable that none of the 10 city officeholders up for re-election March 7 was booted out — City Councilman Gil Cedillo faces a runoff May 16 — and the mayor took a record 81.4 percent of the vote.

Maybe the officeholders who got L.A. into this mess will be the best people to lead us out. But it rarely works that way.

 

Click here to read this article on the LA Daily News website. 


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