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Garcetti Proposes Record Budget Amid Booming Economy

Posted Thursday, April 18, 2019 - 5:49 pm

Big increases in infrastructure investment, police technology, police overtime, illegal cannabis enforcement and support for the homeless were called for Thursday by Mayor Eric Garcetti in his proposed 2019- 20 budget, with projections that continue years of revenue increases.

Garcetti’s proposed budget includes a jump in general fund revenue from $6.19 billion this fiscal year to a record $6.53 billion, and as the national economy continues to be strong, some statistics show Los Angeles outpacing other big cities.

The proposed budget is his strongest to date since taking office in 2013, Garcetti told reporters.

“It’s a budget that lifts up people in need. It’s a budget that gives everyone an opportunity to share in growth and opportunity, and it’s a budget that tells a story of a back-to-basics approach to delivering services that people depend on and need,” Garcetti said.

The total $10.6 billion budget and $6.53 billion in general fund revenue continues an upward trajectory for the city’s coffers, and an increase from $5.24 billion for the general fund in 2014-15.

Garcetti announced his budget proposal during a news conference with reporters at City Hall one day after delivering his State of the City address at Lincoln High School.

He said among the biggest increases were for infrastructure, which includes $348 million for streets repairs and maintenance; $117 million for the Vision Zero street safety program and overall traffic improvements; and $38 million for clean water infrastructure.

The total $940 million proposed for infrastructure would be an increase of $140 million.

New computers for the Los Angeles Police Department and other technology are also among the large increases ($14 million), as well as an increase of 40% for overtime for the LAPD ($52 million), and enforcement to crack down on the hundreds of illegal cannabis shops in the city ($12.5 million). The proposal also includes keeping the LAPD above 10,000 sworn officers.

A total of $457 million also is being proposed for homeless housing and services, which Garcetti said was a record number and includes $281 million from the 2016 Proposition HHH bond measure that aims to raise $1.2 billion over 10 years for permanent supportive housing.

Garcetti also proposed allocating $36 million in 2019-20 out of $85 million that was given to the city by the state in 2018 from the California Homeless Emergency Aid Program.

Garcetti also is proposing a significant increase for his A Bridge Home program, which has been one of his signature programs that aims to open temporary homeless shelters around the city. Last year’s budget dedicated $20 million from the general fund with another $10 million available in the unallocated balance, and the mayor is now proposing $47.5 million for the program.

Three Bridge Home shelters have been opened so far, and Garcetti pledged during his State of the City speech that at least 15 would be open in the next year. A total of $20 million would also be set aside just for services and other programs in the Skid Row neighborhood, where an estimated 2,000 people sleep on the street.

Garcetti also said his budget proposal includes the highest reserves in the city’s history, with 8.05% set aside, including a reserve fund of $399 million, a budget stabilization fund of $106.9 million, and an additional $20 million in the unappropriated balance. By comparison, in 2008-09, the reserve was 4.3% and $192 million.

Roughly 19.4% of the budget is dedicated to pension funds and retirement healthcare costs for city workers. Chief Administrative Officer Rich Llewellyn said the pension plans are predicting a 7.25% return in the coming years, and Garcetti said he is “comfortable” with that projection.

Garcetti also said the budget proposal is the first in many years that does not include a structural deficit.

Jack Humphreville, a neighborhood council budget advocate, said future pension costs should be a concern for the city, despite the booming economy.

“We’re still playing games with the pension plans at 7.25%, that’s very optimistic,” Humphreville told City News Service. “Let’s put it this way, this hayseed from Omaha, Nebraska named Warren Buffet thinks 6% is a pretty decent rate, and if that were the case, the city contribution would increase by $500 million or probably more like $600 to $650 million.”

Garcetti’s proposed budget will be discussed at upcoming meetings of the City Council’s Budget and Finance Committee before being voted on by the full City Council. The new fiscal year begins July 1.

“The mayor has laid out a vision for Los Angeles that charts our course for an ambitious future. When I took office in 2010 during the throes of the Great Recession, the projected deficit for this year was over $1 billion,” said Councilman Paul Krekorian, chair of the Budget and Finance Committee. “Through years of hard work and tough choices under the mayor’s leadership, we built up the strongest reserves in our city’s history. And for the first time since I began leading the city’s budget oversight seven years ago, the proposed budget will eliminate our structural deficit based on the city’s forecast and create structural balance.”

CNS-04-18-2019 17:22

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