Sound Budgeting
Sound Budgeting
The City’s financial condition has worsened significantly in recent months due to the softening housing market, the mortgage lending crisis, stagnant job and wage growth and slowing City revenues. The effect on the City’s budget has been far-reaching and profound, with projected deficits reaching hundreds of millions of dollars for the next fiscal year.
Mayor Villaraigosa believes that, fundamentally, a budget is a statement of values, and in tough times we need to focus on our core mission as a City. LA is the most under-policed big city in America, and the Mayor has pledged to maintain the expansion of the LAPD and to provide essential city services.
In preparing for next year’s budget, Mayor Villaraigosa has committed himself to zero-based budgeting and asked the City Administrative Officer to develop a pilot, zero-based budget to reexamine all functions and programs within the City.
The Mayor believes that now is the time to lead deeper structural changes in the way we do business as a City for the long term. He is committed to outlining major changes in the budget including the consolidation of City functions; centralization of common services; elimination of redundant programs; and development of service level benchmarks and performance measurements.
Reducing the Deficit
Upon taking office, Mayor Villaraigosa inherited a $295 million structural deficit that threatened to undermine the delivery of basic city services. With his first budget, the Mayor made a commitment to eliminate the structural deficit in five years. After two budget cycles, the structural deficit has been cut by over $200 million without raising taxes. At the same time, the City's savings account, the Reserve Fund, has increased to $201 million, the highest amount in history.
Mayor Villaraigosa challenged departments to eliminate vacant positions, reduce workers' compensation costs, invest in technology to expedite service delivery, and collect revenue rightfully owed to the City. The Mayor has reduced funding for non-essential services and resisted initiating new programs. This year, Mayor Villaraigosa called on department managers to cut administrative overhead by 5% without reducing services.
The cuts have spurred innovation and freed resources for key priorities like public safety, transportation, housing, and workforce development. City departments have identified over $70 million in savings, efficiencies, and reductions. In just one example, the Bureau of Street Services found that installing trash compactors at transfer stations could eliminate 5,200 truck trips to landfill sites, saving close to $1 million per year and reducing vehicle emissions.
By demonstrating that Los Angeles can do more with less, Mayor Villaraigosa has shown that progressive policy and fiscal restraint can go hand in hand.