The city of Los Angeles managed to live within its budget in the past year, bringing in $86.7 million more revenue than expected and spending $53 million less than planned, the city controller said Thursday.
But despite the fiscal restraint and higher-than-anticipated income during the 2013-14 fiscal year, the city should continue to maintain a large reserve fund and save money for infrastructure improvements and emergencies, Controller Ron Galperin recommended in his Preliminary Financial Report.
“The city’s reserve fund balance is the highest we’ve seen in more than a decade,” the controller said. “But we must still be vigilant about reducing liabilities and using resources wisely so we can invest in our infrastructure and provide constituent services without increasing our obligations — that’s the recipe for financial success.”
Galperin said the city’s general fund policy is to put at least 5 percent of its revenue into a reserve fund.
For the 2014-15 fiscal year, the city budgeted a reserve that contains 7.45 percent of the general fund, an amount Galperin praised, saying “5 percent should really be considered a floor — not a ceiling.”
Galperin recommended that city officials pay for infrastructure upgrades using the city’s budget stabilization fund, rather than with reserves.
The stabilization fund is replenished whenever revenue from seven different taxes that go into the general fund increases by more than 3.4 percent.
“We absolutely need investment in our infrastructure and we need a healthy stabilization fund to mitigate the effects of economic downturns,” Galperin said. “Both should be funded adequately.”
— City News Service