Los Angeles Controller Ron Galperin warned of rising expenses the city is facing in his presentation Friday of the city’s Annual Financial Report for fiscal year 2019.

“Los Angeles experienced revenue growth in the last fiscal year, but spending jumped significantly, as well,” Galperin said. “We know that the cost of providing neighborhood services will continue to rise, and the potential for a slowing economy should never be far from our minds. The city must be disciplined in its budgeting, grow its reserves and manage its special funds more transparently.”

In fiscal year 2019, total city revenues increased 13.7% to $18.2 billion, due to money coming in from the city’s airports, harbor and water and power utility, along with strong growth in property tax, sales tax and accrued grant revenues, Galperin said. Overall expenses increased by 7.5% to $15.1 billion, largely from higher salaries and benefits.

Some of the finances the city needs to watch, Galperin said, include:

–Salaries, benefits and pensions. “While it is unclear whether revenues will keep climbing, it is undeniable that expenses will go up as recently adopted city employee pay and benefits increases kick in,” Galperin said. Pension costs are also expected to increase in the coming year because recent investment returns have dropped from 9% to 6%, a number lower than the city’s target rate of return.

–Retiree health care. The city’s retiree health benefits are a net liability of $2.8 billion and are currently 68% funded. Galperin said this will remain a cost to the city going forward, but Los Angeles is doing better than other large cities.

–Housing and homelessness. Voters approved Proposition HHH in 2016, a $1.2 billion bond to build tens of thousands of homeless housing units. In FY19, the city issued $276 million in debt and spent $58 million. The total issuance to date is now $362 million and $110 million has been spent. Galperin said the city must continue to look for ways to build homeless housing faster and more efficiently to keep pace with the crisis.

–Special funds. The city relies on more than 700 special purpose funds to maintain parks, build affordable housing, pick up trash and more. The overall balance of these funds has continued to grow, and the controller said the city needs to adopt a plan to manage them and ensure the money is used to meet community needs.

Galperin also posted more than 60 interactive charts and graphs online that measure the quality of city services in FY19 compared to previous years.

The highlights he included were:

–The number of 311 calls (service calls) increased, but wait times dropped. The 1.2 million Angelenos who called 311 waited an average of 2 minutes and 54 seconds before getting served in FY19, a decrease of two full minutes from the year prior, even though 281,259 more calls came in.

–Library visitors decreased, but 1 million more materials got checked out. The total number of library visitors dropped for the fifth straight year, yet the number of library materials checked out jumped to almost 17.2 million in FY19, 1 million more than FY18.

–Street resurfacing increased, but sidewalk repairs decreased. In 2019, 60 more lane miles of streets were resurfaced over the year prior, and 313,648 square feet of sidewalks were repaired, 15,000 fewer square feet than the year prior.

–Public pool attendance increased, while the number of youth playing team sports plummeted. Attendance rose at city pools by more than 200,000, but team sports participants fell from 75,306 in FY18 to 55,570 in FY19, down from a high of almost 102,000 in FY13.

The more than 400-page financial report is available at lacontroller.org/cafr2019.

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