Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Finance topic
No spam. Unsubscribe anytime.
Council adopts budget committee plan to begin reserve for Rampart liabilities; tobacco securitization deferred
Summary
After public testimony urging tobacco settlement funds be used for tobacco control, the City Council approved portions of a Budget & Finance Committee report to create a liability reserve and a combined cash/judgment-obligation bond approach for potential Rampart-related judgments, and deferred proposals to securitize tobacco settlement payments.
The Los Angeles City Council on March 15 moved to create a reserve for potential extraordinary liability claims arising from the Rampart police corruption matter and adopted several Budget and Finance Committee recommendations aimed at planning for liabilities without immediately securitizing tobacco settlement revenues.
Public testimony during the item included multiple speakers from public-health organizations — including the American Heart Association, the Los Angeles County Tobacco Control Alliance and Safe Smoke Free Air for Everyone — who urged the council not to use or securitize tobacco settlement funds for unrelated city needs, and instead set aside tobacco funds for tobacco-control programs and enforcement. Speakers told the council they opposed Mayor Richard Riordan—s proposal to securitize tobacco settlement money to cover costs tied to the police corruption scandal.
Budget and Finance Committee Chair Mike Feuer said the committee concluded securitization of tobacco payments was the most costly option and recommended a cautious approach that would provide planning flexibility. Feuer moved to create an ordinance establishing a reserve for extraordinary liability claims and to approve a core concept using a combination of cash and, if necessary later, judgment-obligation bonds to meet potential liabilities. He also moved instructing the CAO to work with departments to encumber prior-year funds into the reserve and to adopt reporting requirements; several items involving actual fund transfers were held for one week at the mayor—s request.
After discussion about timing and the need to avoid reducing ongoing city services, the council voted to adopt items 1, 2, 4 and 7 of the committee report and to continue items 3, 5 and 6 for one week for further budget scrutiny. The clerk recorded 10 ayes and 1 no on the motion recorded in the official roll.
Councilmembers emphasized the need to preserve options and avoid signaling large available cash sums to plaintiffs' attorneys while creating prudential safeguards so the city can meet future obligations without cutting current services. The council also requested departments identify prior-year funds that could prudently be set aside without harming services. The items continued for a week include proposed transfers and securitization options that the mayor requested more time to review.
