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City of Los Angeles  COMMUNITY BUDGET DAY                Budget Overview                    P R E S E N T E D   B Y   M I ...
Topics 2012-13 Budget    General Fund and Special Funds      Revenues      Appropriations   Reserve Fund Issues and ...
Fiscal Year 2012‐13 Budget at a Glanceo The City’s General Fund  supports most of the           FISCAL YEAR 2012-13      A...
Fiscal Year 2012‐13 Adopted Budgeto General Fund revenue  fluctuates depending on  economic conditions.  Diversity of reve...
Fiscal Year 2012‐13 General Fund Revenue Sourceso No single source of  income comprises  more than one third of  the City’...
Fiscal Year 2012‐13 General Fund Appropriationso Public Safety continues to  be a priority for the City,  with the Police ...
Fiscal Year 2012‐13 Distribution of Unrestricted Revenues o While the Police and Fire   Departments accounted for         ...
Fiscal Year 2012‐13 Adopted Budget – Reserve Fundo The July 1, 2012, Reserve Fund        o The Actual Reserve Fund Balance...
Slow Recovery/Recessionary EnvironmentThe financial backdrop for this year’s budget and for next year’s budget continues t...
Federal and State Actions Federal      The looming “fiscal cliff” threatens recovery with the expiration of the      $44...
Pensions and Benefits – Estimated Contributions                                                                           ...
Pension Reform The Civilian Tier II will reduce the City’s future pension costs by:     Increasing the normal retirement...
Projected Deficits from 2013‐14 to 2016‐17                    12
Actions Taken by the CityThe FY 2013‐14 deficit has been reduced from a projected $1 billion to $216 million by implementi...
Five Guiding Principles        I                     II.                      III.                 IV.                V. R...
Potential Solutions to Offset the $216 Million Deficit                          15
Potential Revenue to Eliminate the $216 Million Deficit  An half cent sales tax increase would generate an additional  $21...
Next Steps in the Budget Development Process 2012    September 28    Mayor released his Budget Policy Letter to departme...
F O R   A D D I T I O N A L   B U D G E T   I N F O R M AT I O N   A N D   O N L I N E                 B U D G E T   D O C...
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2012 Budget Day Presentation

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Transcript of "2012 Budget Day Presentation"

  1. 1. City of Los Angeles COMMUNITY BUDGET DAY Budget Overview P R E S E N T E D   B Y   M I G U E L   A .   S A N TA N A C I T Y   A D M I N I S T R AT I V E   O F F I C E RNovember 17, 2012
  2. 2. Topics 2012-13 Budget  General Fund and Special Funds  Revenues  Appropriations  Reserve Fund Issues and Challenges  Economy  Federal and State  Pensions Development of the 2013-14 Budget  Outlook  Five Guiding Principals  Solutions 1
  3. 3. Fiscal Year 2012‐13 Budget at a Glanceo The City’s General Fund supports most of the FISCAL YEAR 2012-13 AMOUNT Authorized municipal services in the BUDGET COMPONENT ($ Millions) Positions City such as Fire and City Budget $7,246 31,817 Police services. General Fund $4,550 21,724o Special funds are Special Funds $2,695 10,093 generated for a specific purpose, typically Proprietary $12,003 14,514 approved by voters for a Department Budgets specific service like sewer Airports $4,341 3,534 construction. Harbor $954 994o Proprietary Departments Water and Power $6,708 9,986 are governed by separate boards but still fall within Grants & Other the jurisdictional review of Non-Budgeted $1,337 the Mayor and City Total City Government $20,586 46,331 Council. 2
  4. 4. Fiscal Year 2012‐13 Adopted Budgeto General Fund revenue fluctuates depending on economic conditions. Diversity of revenues helps stabilize volatility.o Most budget decisions pertain to the General Fund.o Special funds provide stability for the City and its services by ensuring a dedicated source of funding for key services, but offer minimal flexibility. 3
  5. 5. Fiscal Year 2012‐13 General Fund Revenue Sourceso No single source of income comprises more than one third of the City’s revenue base.o 69% of General Fund revenue comes from six economically sensitive categories: o Property Tax o Utility Users’ Tax o Business Tax o Sales Tax o Transient Occupancy Tax o Documentary Transfer Tax 4
  6. 6. Fiscal Year 2012‐13 General Fund Appropriationso Public Safety continues to be a priority for the City, with the Police and Fire Departments accounting for more than a third (38%) of total General Fund Appropriations.o The next largest appropriation is to Pensions and Retirement (19%) which almost equals the collective amount budgeted for all other City departments (20%). 5
  7. 7. Fiscal Year 2012‐13 Distribution of Unrestricted Revenues o While the Police and Fire Departments accounted for 2012‐13 Budget  only 38% of total General Unrestricted Revenues  Fund Appropriations, $3,780 million combined they account for Police 72% of unrestricted revenue 55% Fire Public Works 17% Street Services expenditures. These Public  Transportation expenditures include their Engineering allocation of pensions and Safety, 72% Capital  health care costs. Improvements Building & Safety Planning 7% o Restricted Revenues include Library sewer revenues, gas tax, Parks and  4% grants, and fees for special Other Recreation services. 11% 6% 6
  8. 8. Fiscal Year 2012‐13 Adopted Budget – Reserve Fundo The July 1, 2012, Reserve Fund o The Actual Reserve Fund Balance balance was $227 million (4.99% was $8.97 million more than the of the General Fund). Adopted Budget. 7
  9. 9. Slow Recovery/Recessionary EnvironmentThe financial backdrop for this year’s budget and for next year’s budget continues to be dominated by: global fiscal uncertainty; slow recovery in the US; and high unemployment  Local 1% Sales Tax and Local Unemployment Rate Unemployment Rate -- Seasonally Adj. Sales Tax 14 500 12 429 Unemployment Rate % 10 357 Sales tax -- $ Millions 8 286 6 214 4 143 2 71 0 0 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Fiscal Year Ending 8
  10. 10. Federal and State Actions Federal  The looming “fiscal cliff” threatens recovery with the expiration of the $440 billion in tax cuts and the implementation of mandatory $100 billion across-the-board spending cuts, should a budget compromise not be achieved. The Congressional Budget Office projects that the economy would contract at an annual rate of 0.5 percent in the first half of the year resulting in a recession. State  The approval of Proposition 30 will generate $8.5 billion for the state to avoid reductions to education. It will not generate any additional revenue or State funding for the City. 9
  11. 11. Pensions and Benefits – Estimated Contributions  $1,285 $1,213 $1,121 $999Data shown is as of July 2012 and does not include recent changes pension plans based on newemployee agreements or revised actuarial assumptions. 10
  12. 12. Pension Reform The Civilian Tier II will reduce the City’s future pension costs by:  Increasing the normal retirement from 55 to 65  Lowering the maximum retirement factor from 2.16% to 2% per year  of service  Capping the maximum retirement allowance at 75% of an employees’  final compensation  Limiting healthcare to retirees only The Sworn Tier VI will reduce the City’s future pension costs by:  Requiring employees to contribute 2% towards retiree healthcare  Lowering the minimum Pension Percentage from 50% to 40% for 20  years of service  Calculating final compensation based on two year average instead of  a one year average 11
  13. 13. Projected Deficits from 2013‐14 to 2016‐17 12
  14. 14. Actions Taken by the CityThe FY 2013‐14 deficit has been reduced from a projected $1 billion to $216 million by implementing the following structural solutions: Eliminating of over 5,000 positions  Increasing employee contributions to retirement plans and health  insurance Imposing a 20% salary reduction for new sworn police Eliminating non‐essential functions and consolidated departments  Refinancing debt to lower interest rate Reducing service contract costs Improving citywide billing and collections 13
  15. 15. Five Guiding Principles  I II. III. IV. V. Responsible  Fiscal  Focus on  Alternative Service  Sustainable  Management Core Services Delivery Models  Workforce Revenue• Maintain a • Prioritize services • Implement • Reduce the • Maximize the strong Reserve and fund accordingly, alternative ongoing cost of General Fund Fund including support service delivery the City’s costs models workforce with • Enhance minimal service existing or impact establish new• Make smart • Reestablish a base • Establish a investments revenues service level for managed • Reduce the sources priorities consistent competition ongoing cost of with available process for select the City’s funding services workforce through • Realign services strategic size across departments reductions based on core- competencies 14
  16. 16. Potential Solutions to Offset the $216 Million Deficit 15
  17. 17. Potential Revenue to Eliminate the $216 Million Deficit An half cent sales tax increase would generate an additional $215 million in General Fund Revenue • Sales Tax is 7% of General State Rate 6.25% Fund receipts Statewide Bradley-Burns Rate (1%) • The City receives $.0075 for County Transportation 0.25% ever taxable dollar spent in the Local Point of Sales 0.75% City Local Sales (Transaction) Taxes (capped at 2%) Proposition A 0.50% • FY 2011-12 sales tax revenue Proposition C 0.50% was $323 million Measure R (exempt from 2% cap) 0.50% • FY 2012-13 is projected to be Total Tax Rate in the City 8.75%* $332 million*The approval of Proposition 30 will increase the City’s tax rate to 9.00% 1/1/2013 through 12/31/2016 16
  18. 18. Next Steps in the Budget Development Process 2012  September 28    Mayor released his Budget Policy Letter to departments  October 9           CAO released budget instructions based on the Mayor’s  policy direction  November 15    Department budgets are due to Mayor and CAO  November 17    Community Budget Day 2013  Jan./Feb. Budget meetings with Mayor’s Office and departments  March 1 Controller’s revenue projections  March Final budget decisions  April 20 Mayor’s Budget due to City Council  April/May Budget and Finance Committee reviews budget  May City Council considers budget  June 1 Charter deadline for Council to consider budget 17
  19. 19. F O R   A D D I T I O N A L   B U D G E T   I N F O R M AT I O N   A N D   O N L I N E   B U D G E T   D O C U M E N T S   P L EA S E   V I S I T: C A O . L A C I T Y. O R G B U D G E T. L A C I T Y. O R GC O N T R O L L E R . L A C I T Y. O R G / A D O P T E D B U D G E T/ I N D E X . H T M  
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