overview - los angelescao.lacity.org/budget17-18/2017-18 proposed budget.cao.pdfgeneral fund...

2017-18 Proposed Budget April 26, 2017

OVERVIEW OF THE

2017-18 PROPOSED BUDGET

Richard H. Llewellyn, Jr. Interim City Administrative Officer


SUMMARY

• Budget Overview

• Financial Policy Compliance

• Expenditures: Key investments and concerns

• Revenues: Levels and concerns

• Four-Year Budget Outlook


BUDGET OVERVIEW

**

TOTAL PROPOSED 2017-18 CITY GOVERNMENT

Appropriations ($ Millions)

Authorized Positions*

I. Proprietary Departments Airports $ 5,795.2 3,927 Harbor $ 1,169.0 999 Water and Power $ 8,436.2 10,650

Total $ 15,400.4 15,576

II. General City Budget General Fund $ 5,779.3 22,964 **

Special Funds $ 3,453.5 10,355 Total $ 9,232.8 33,319

III. Grants and other Non-Budgeted Funds Total $ 1,299.1 -

Grand Total $ 25,932.3 48,895

* Regular positions. ** Sworn staff represents 59 percent of General Fund positions.


BUDGET OVERVIEW

Budget ($ Millions) Authorized Positions

Budget

Component

Adopted

2016-17

Proposed

2017-18

Percent

Change

Adopted

2016-17

Proposed

2017-18

Percent

Change

General Fund $ 5,576.4 $ 5,779.3 3.6% 22,866 22,964 0.4%

Special Funds $ 3,200.6 $ 3,453.5 7.9% 10,239 10,355 1.1%

Total $ 8,777.0 $ 9,232.8 5.2% 33,105 33,319 0.6%


BUDGET SUMMARY

Fire 17.2%

Police 52.8% Library

4.7%

Recreation & Parks 5.7%

City Attorney 3.2%

Other 7.7%

Public Works Sanitation

Street Services Transportation

Engineering Board

Contract Admin. Capital Improvements

Building & Safety Planning

8.7%

UNRESTRICTED REVENUE ($4.8 BILLION) (2017-18 Proposed Budget)

Unrestricted Revenues are 51.7% of the City Budget.

Restricted Revenues (48.3%) include those from grants,

fee supported and reimbursed programs, and special

funds.


FINANCIAL POLICY COMPLIANCE

Policy Compliance

Reserve Fund at least 5% of General Fund

July 1 at $294 million, or 5.09%

Budget Stabilization Fund contribution if growth of seven economically sensitive taxes is over 3.4%

$75 million in tax growth used for infrastructure

Capital investment at 1% of General Fund

Investment of 1.29% or $75 million

All one-time revenues used for one-time expenditures

$31 million in one-time revenues for $70 million in one-time expenditures

Debt service ceiling from non-voter approved debt of 6% of General Revenues

4.32% in Proposed Budget, and expected to remain below 6% throughout 7-year projections



4.23%

5.55%

3.22% 4.05%

4.98%

7.06% 7.19%

8.72%

7.88%

6.90%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$400.0

$450.0

$500.0

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18(Proposed)

Mill

ion

s

BUDGET RESERVES (Reserve Fund, Budget Stabilization Fund, and UB Reserves)

Emergency Reserve Contingency Reserve Budget Stabilization Fund

UB Reserves Total Percentage of General Fund



$48.9

$11.6

$24.6

$9.1 $6.4 $6.5 $6.8

$51.7 $54.8

$74.7

$89.5

$74.6

1.13%

0.26%

0.54%

0.21% 0.15% 0.15% 0.15%

1.06% 1.07%

1.38%

1.60%

1.29%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

$100.0

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18(Proposed)

Mill

ion

s

CAPITAL INVESTMENT AS PERCENTAGE OF GENERAL FUND REVENUE

Total GF Capital Investment 1% Spending Level



$53

$18

$66

$146

$181

$156

$118

$31

$103

$35

$83 $88

$110

$156

$121

$70

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

ONE-TIME REVENUES VS. ONE-TIME EXPENDITURES (Proposed Budget)

One Time Revenues One Time Expenditures



3.96%

4.32% 4.43% 4.30% 4.04% 3.87%

3.14% 2.56% 2.56%

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2017 2018 2019 2020 2021 2022 2023 2024 2025

De

bt

Se

rvic

e A

mo

un

t (0

00

's)

Fiscal Year

NON-VOTER APPROVED DEBT (April 2017)

Convention Center Current MICLAs Commercial Paper Future MICLAs (CP Refundings) Judgment Obligation Bonds

6% General Revenues

For every 0.1%, approximately $55 million in project funding may be issued (at 5.5% over 15 years).


• Addressed Obligations – $40 million for increased liabilities

– Employee-related cost increases: $120 million for salaries, $17 million for pensions, $12 for workers’ comp, and $42 for health and other benefits

– $35.9 million for Accessible Housing Program, per settlement

– $31 million for Sidewalks

– $121 million for LAPD overtime

– Continuation of Police and Fire hiring

– $131 million commitment to fighting homelessness (does not include sale of surplus property)

• New Programs – $89.1 for homeless housing and facilities from Measure HHH

– $42.0 for roads and infrastructure from Measure M

– $23.4 for road reconstruction from increased Gas Tax (SB 1)

– $0.8 for Department of Cannabis Regulation

• Increased Services – 24 positions and $0.8 million to reduce community plan cycle to six years

– $2 million for graffiti abatement

– $2.9 million for one Clean Streets Team and two HOPE Teams

EXPENDITURES: KEY INVESTMENTS


Potential Areas of Expenditure Shortfall

• $53 million in achievable but significant expenditure reductions

• $40 million increase for Liability Claims is a positive step, but still below actual expenditures in 2015-16 and 2016-17.

Limited Sources Available in Case of Shortfall

• Reserve Fund at 5.09% on July 1, 2017, just above policy level and projected to drop to 4.63% by June 30, 2018.

• $10 million in Unappropriated Balance – Reserve for Mid-Year Adjustments provides only limited protection.

EXPENDITURES: CONCERNS


General Fund revenues increased by $202.8 million from 2016-17 to 2017-18. Major changes include:

REVENUES: LEVELS

Source Amount (Millions)

Property Tax $44.6 Assumes 5.8% growth from 2016-17 Revised

License, Permits, Fees, and Fines

$102.9 $52 million for LAPD/MTA contract, $31 million from special fund reimbursements, and $12 million from billboard leases

Electric Users Tax $25.0 Estimate provided by the Department of Water and Power

Transient Occupancy Tax

$35.5 $33.7 from Short-term rentals

Power Revenue Transfer

($48.5) Estimate assumed in the proposed Department of Water and Power budget

Franchise Income $15.6 $15.6 million from solid waste collection franchise


REVENUES: LEVELS

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

-10%

-5%

0%

5%

10%

15%

20%

25%

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

$ B

illion

s

% C

han

ge

fro

m Y

ear

Ag

o

Fiscal Year Ending

SEVEN GENERAL FUND TAXES

% change -- Left Scale 7 General Fund Taxes ($Billions) -- Right Scale

(Property (includes VLF), Utility, Business, Sales, Hotel, Documentary, and Parking Taxes)


REVENUES: CONCERNS

Revenues that are dependent on currently pending policy decisions:

• $12 million – Billboards

• $34 million – AirBnB

• $8.1 million – Gas Franchise Fees

• $15.6 million – Solid Waste Franchise

• $10 million – Linkage Fee (to the Affordable Housing Trust Fund)


THE OUTLOOK

$5,779

$5,915

$6,090

$6,267

$6,454

$5,779

$6,018

$6,219

$6,336

$6,444

($104)

($129)

($69)

$10

$5,700

$5,900

$6,100

$6,300

$6,500

2017-18 2018-19 2019-20 2020-21 2021-22

Mill

ion

s

FOUR-YEAR BUDGET OUTLOOK (2017-18 Proposed Budget)

Revenues Expenditures


THE OUTLOOK: PENSIONS COSTS

$435

$623 $666 $639 $653

$725 $793

$848

$944

$1,037 $1,058 $1,075 $1,085

$1,231 $1,300 $1,316 $1,311

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

GENERAL FUND CONTRIBUTIONS TO LACERS AND LAFPP (Actual Amounts 2005-17; Proposed 2017-18; Projected 2018-22*)

LACERS LAFPP Impact of Decrease in Assumed Rate of Return by 0.25% Total

* Projections are based on a study commissioned by the CAO. Impact of increased rate of return assumption based on rule of thumb that 0.25% reduction increases cost by 3.0% of covered payroll.


THE OUTLOOK: PENSIONS COSTS

11.0%

14.2% 15.0%

14.0% 14.8%

16.6%

18.1% 18.6% 19.4%

20.2% 19.6% 19.3% 18.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18(Proposed)

PERCENT OF GENERAL FUND USED FOR LACERS/LAFPP CONTRIBUTION

overview - los angelescao.lacity.org/budget17-18/2017-18 proposed budget.cao.pdfgeneral fund...

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