Kudos to the mayor for a slick presentation, but that’s as far as it goes. Form wins over substance – yet again.
With labor negotiations underway, I would not be so quick to use $47.9 million of the city’s reserve fund to plug the $242 million budget deficit, but that is exactly what Eric Garcetti did. How sure can he be that no raises will be offered in the upcoming fiscal year? I hope he is right, but budgets should not be based on hope. If that assumption does not pan out, then tap the reserve fund, but not before.
Equally shaky is the assumption that investment earnings on the pension portfolios will be higher than anticipated.
Unless the lion’s share of the investments are in relatively short-term, fixed rate bonds, predicting returns requires a crystal ball. So far this year, markets have been very turbulent and the world economy could be in for rough sledding due to the crisis in Ukraine. Russia’s economy is deeply integrated with the rest of the world’s. Sanctions against Putin’s reincarnation of the former Soviet Union will have ripple effects, unlike the ones that have been squeezing Iran.
One-time revenue of $52.6 million does nothing to fix the structural deficit. Nothing more needs to be said on that point.
The biggest mystery is what constitutes the basis for the $64.8 million from efficiencies and reductions. We already know that some of it represents the elimination of vacant positions. Those are not really cuts. We would be better served if the mayor also presented a comparison of the proposed budget against an estimate of this year’s actual results. Garcetti, as all the mayors before him, is playing a game. It is easy to sandbag vacancies and use them in the next budget process to give a false impression of progress on the cost reduction front.
Are the other reductions programmatic or a series of one-off, what-if guesses? Do tell, mayor.
I can accept the revenue growth estimate as reasonable, especially with respect to property taxes.
I realize politicians will blow smoke to cover up deficiencies, but shouldn’t they at least use e-cigarettes? They are less hazardous.
I forgot. The City Council banned them.