Los Angeles City Controller Ron Galperin Thursday warned that new public programs financed through funds from the American Rescue Plan Act could face cuts or elimination next year.
“Last year was unlike any other,” Galperin said. “The pandemic hit our neighborhoods and the economy, putting the city in a revenue crunch. A combination of belt-tightening and federal assistance helped Los Angeles get back to a solid financial position, but funding for new homelessness and equity programs will dry up next year, creating tough spending choices.”
Galperin on Thursday released a 2021 preliminary financial report with the city’s balance sheet for the 2020-21 fiscal year that ended on June 30.
“If we want to continue to pay for these priorities, the city should focus on programs that work, cut those that don’t and invest in neighborhoods where the most help is needed,” Galperin said.
Los Angeles’ current fiscal year budget is $11.2 billion, and includes nearly $1 billion to address the homelessness crisis. The funds in the budget include part of the $1.28 billion the city received through the American Rescue Plan.
During the 2020-21 fiscal year, which didn’t include rescue plan funds, the total revenues budgeted were $9.23 billion, a 0.7% increase from the year prior.
That year, the city spent about $8.8 billion, 1.7% less than the year prior, which is attributed largely to the city’s hiring freeze and wage cuts.
The city’s reserve fund in July 2021 was the highest its ever been due to the American Rescue Plan, which replenished it after the city tapped into that account to keep the city running during the COVID-19 pandemic.
According to Galperin, the city faces tough choices ahead, as one-time funding used this year won’t be available in the future.
Galperin urged city officials to focus on revenue and limit additional spending increases, support successful new programs and cut those that aren’t performing well, maintain a strong reserve fund to use in an emergency and use debt financing to build equity.
Galperin’s report can be viewed at lacontroller.org/pfr2021 and people can track the city’s spending at bit.ly/35Lygrk.
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