Editorial: L.A. is broke. And the budget crisis is self-inflicted
Depicted: LA City Hall in War of the Worlds (1953).
Fiscal woes are not unique to Bay Area cities (lookin' at you, Portola Valley). The Los Angeles Times editorial board notes that the city is teetering on the edge of a fiscal emergency, with its finances in “dire” condition and no money to cover unplanned expenses.
So if you were hoping this would be the year that City Hall, in preparation for the 2028 Olympics, would get moving on smoothing busted sidewalks, fixing burned-out streetlights, trimming trees or any other public investments to make the city nicer for residents and visitors alike — don’t hold your breath.
L.A. is broke. Mayor Karen Bass and the City Council have to get serious about developing a plan to stabilize the city’s finances this year and for the future.
It won’t be an easy task. In just the first three months of the fiscal year that started July 1, the city is on the hook for $258 million in liability costs. The largest category of payouts — 40% — is related to Police Department negligence or use of force. About a third of the payouts involve personal injury cases from dangerous conditions, such as broken sidewalks and streetlights. Some 15% are employment cases involving harassment and other workplace conditions.
While the liability expenses are the immediate cause of the dire financial picture, the budget adopted by Bass and the council was already overstretched in large part because of expensive raises for police officers and civilian employees approved in the last fiscal year.
The city started off this fiscal year in violation of its own financial policy to maintain a reserve fund — where cash is stashed to cover emergency or unforeseen expenses — of at least 5% of the $8-billion general fund budget. (The goal is 10%.) The reserve fund was 4.12% on July 1, according to City Controller Kenneth Mejia. If all of the liability costs are paid from reserves, the fund would drop to 2.8%. And if the fund drops below 2.75%, the council is required to declare a fiscal emergency.
To prevent that, city leaders are considering extreme measures, including borrowing money to pay off some of the judgments and settlements, which means adding interest to the initial cost. The city is also likely to continue slowing or stopping some city employee hiring, which further reduces basic services such as street repairs, park maintenance and code enforcement.
And city leaders have to decide what are the core services that L.A. can afford to provide — or should provide. Public safety is an essential responsibility of local government, but what tasks can civilian employees do more efficiently so sworn police officers can focus on responding to and resolving crimes?
Easing homelessness is a top priority, but should the city continue to pay for social support, mental health and treatment services that are the responsibility of county government? What programs and services should be cut because L.A. cannot afford to do everything for everybody? And what basic municipal responsibilities keep getting reduced because the city isn’t being judicious in its spending decisions?
Read the whole thing here.
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