Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the City Finance Forecast topic
No spam. Unsubscribe anytime.
City controller warns of flat revenues, shrinking reserves in revised forecast
Summary
City Controller Kenneth Mejia told the Budget and Finance Committee that General Fund revenues are forecast to end the year below budget and to remain essentially flat into next fiscal year, citing reduced grant receipts, lower consumer spending and wildfire impacts; the committee approved the report.
The Los Angeles City Controller told the Budget and Finance Committee on March 11 that revised revenue forecasts show a modest decline in general fund revenues and continued pressure on the city's reserve, prompting calls for structural changes in budgeting.
"We are estimated to end general fund revenues at $7.9 billion," Kenneth Mejia told the committee, saying that figure is roughly $140 million below the current adopted budget. He and his team projected general fund revenues of about $7.8 billion for the next fiscal year, driven in part by waning federal COVID-related grants and weaker sales and business tax receipts.
Nut graf: The controller's office highlighted inflationary pressures, decreased consumer spending among lower-income households, wildfire costs and uncertainty around federal funding as drivers of a flat revenue outlook. The forecast fed a broader committee discussion on moving toward multiyear budgeting, improved performance measures and more realistic liability budgeting.
Key points from the presentation and Q&A - Major drivers: The controller cited a roughly $92 million shortfall in sales and business taxes and the anticipated winding down of federal grant receipts (COVID recovery funds) as principal factors behind the lower revenue forecast. - Reserves and liquidity: The office estimated the city's reserve could drop to about $258 million (roughly 3.22 percent of the general fund) once pending transfers and settlement obligations are accounted for, down from $648 million about a year and a half earlier. - Short-term cash needs: General fund cash flow needs for July–December were estimated between $350 million and $525 million, driven by large pension and retirement payments. - Longer-term concerns: The controller and his deputy recommended a two-year budget cycle, performance-informed budgeting, honest accounting for liability payouts and greater departmental budget flexibility.
Committee reaction: Committee members asked for more granular analysis (for example, reviewing which departmental fees cover full cost recovery and how vacancy reductions have affected service delivery). The controller's office said it is working with department general managers to tie monthly spending to monthly performance metrics and to compile backlog metrics so council can better assess service effects from cuts.
Action: The committee moved to approve the controller's report (agenda item 3); the clerk recorded five ayes and the item passed.
Ending note: The controller characterized the city's fiscal condition as a multi-year challenge, and both staff and council members signaled support for multiyear budgeting and greater transparency to guide decisions across departments.
