LA County Balances Budget, LA City Not So Much

Preserving critical services while avoiding layoffs and furloughs, a $23.3 billion balanced budget for Los Angeles County's 2011-12 fiscal year was unveiled Monday by county Chief Executive Officer William T. Fujioka.

The county will address the current $220.9 million shortfall by eliminating 257 vacant positions that were previously budgeted, using a one-time funding of $185.2 million, continue operational spending reductions to save $35.7 million and utilize help from labor partners.

The Economic Reserve Fund and the Rainy Day Fund were left intact, according to a statement by L.A. County’s department of public affairs.

For the first time since 2006 to 2007, LA County is starting to see an increase in sales tax revenues and property taxes, which are projected to grow by 0.7 percent in 2011 to 2012, read the release.

Despite the fact that revenues have increased slightly, the demand for programs and services continues to increase, most notably General Relief assistance welfare payments. The county’s monthly average General Relief caseload has grown from 58,599 in 2006 to 2007 to an estimated 106,894 this year – an increase of almost 100 percent, according to officials.

“The County of Los Angeles remains better positioned than most other state and local governments to manage these extraordinary events. Continuing to maintain service levels, avoid significant layoffs and produce a balanced budget will only be possible to the extent recent economic indicators showing signs of improvement are sustained,” Fujioka said in the statement.

On Wednesday, L.A. Mayor Antonio Villaraigosa, will release the city budget, which is expected to be in disparity with economic upturns reported in the county’s budget.

In last week’s state of the city address on April 13, Villaraigosa said that his new budget “represents one version of our future; forced on us by the economic downturn and our past failure to live within our means. These lay-offs and service cuts I have proposed will be severe. And they will be painful. But let me be first to say, we can we do better. We can avoid many of these cuts and we can find better ways of protecting our fiscal health and balancing our budget.”

The Neighborhood Council Budget Advocates (NCBA), which consists of 93 local neighborhood councils including a representative of the Pacific Palisades Community Council, and is directly empowered by the City Council and dedicated to improving the quality of life in their respective communities, made recommendations to the city council on April 6.

Titled “Saving Jobs—Saving Services: A White Paper with Recommendations to Decrease the L.A. City Budget Deficit in a Time of Economic Crisis,” the NCBA’s six-page document outlined strategies to improve government efficiency, generate increased revenues, implement structural changes in government and reduce expenditure.

The NCBA also presented a version of those recommendations to Mayor Antonio Villaraigosa on March 21.

While councilmembers listened—many with rapt attention—the budget advocates emphasized that Los Angeles cannot expect to bridge a projected budget deficit of more than $400 million without streamlining its sources of revenue, management, pension programs and tax-collection mechanisms.

Here is a recap of the NCBA’s key recommendations:

• Authorize relevant government agencies to monitor businesses and ensure that they pay for business permits in a timely manner or face suspension and/or revocation of their permits.
• Create a central billings and collections department that focuses on increasing government’s efficiency and accountability.
• Conduct an inventory of all unoccupied city-owned property, with the aim of relocating city offices and departments housed in private rental properties.
• To reduce revenue wastage resulting from poor planning, ensure that all citywide purchases of equipment and software include all the necessary components for maintenance and upgrades.
• Hire appropriately qualified commercial parking lot operators to run the city’s parking facilities.
• Encourage the occupancy of distressed or vacant commercial property for large and small business owners.
• Support the City Attorney’s efforts to study specific business branding opportunities in Los Angeles.
• Continue to promote the city’s “Shop L.A.” campaign launched last November and recruit more corporate sponsors.
• Consolidate the city’s five separate police department into a single department under the LAPD’s leadership, with a single chief.
• Create a program whereby LAPD supervisors and/or managers can settle potential lawsuits in the field, similar to the program currently underway in the L.A. County Sheriff’s Department.
• Consolidate departments that can be easily merged, such as the Office of Finance and the Treasury, thereby reducing operating costs and increasing efficiencies.
• Create a Citizen’s Commission to come up with creative ways to run the Public Employee Pension and Benefit Review so that the city’s pension obligations, the largest expense after payroll, can be discharged with greater efficiency. Tap academic experts, leading entrepreneurs and labor leaders, as well as informed citizens and Neighborhood Council members for the Commission.
• Increase all employee pension contributions to 11 percent.
• Raise the healthcare co-pay of city employees from $10 to the below-market rate of $20—just $5 above the $15 co-pay that the City Administrator’s Office has already negotiated with the Coalition of City Unions—thereby saving the city a total of $3.5 million.
• Implement tiered salary cuts for sworn and civilian personnel to create an overall $200 million reduction in payroll, excluding pension and benefits.
• Eliminate furloughs, which reduce city services.
• Support, encourage and promote the use of the City Controller’s “Whistle-Blower Hotline” and consider introducing a “Whistle-Blower Protection Ordinance” that provides economic incentives and reward to employees whose reports of fraud, waste or abuse result in demonstrable economic savings to the city.

“These budget recommendations are absolutely essential and they were made essential because of the budget crisis,” Daniel Wiseman, a physician and NCBA secretary who was one of the major speakers at the April 6 presentation, told the City Council. “This is the beginning of our discussion and I hope it goes on until we can provide the best solution possible.”

"I felt Councilman Cardenas was being extremely defensive," said Jay Handal, budget advocate for the West L.A. Neighborhood Council. "The fact is that had the city collected all the outstanding money in the past and made the structural changes recommended by the City Controller, the city would not be in the critical fiscal shape it is in today."

Handel said that while he concedes that as much as 50 percent of the public debt is probably a write-off, even collecting half of the remaining 50 percent would generate $75 million, which would pay for more than 85 jobs in the city. Handel added that about 15 percent of the roughly 420,000 businesses in L.A. "don't report their revenues because there's no enforcement."

To view a copy of the NCBA report , which was submitted to the mayor and city council click here.