Looking Out for Taxpayers, by Ron Galperin, L.A. Controller

Click to watch a short video on the City’s Annual Financial Report.
Los Angeles is the second largest city in America, with a population greater than 4 million people, a total budget of $30 billion, and 47,000 City employees working in 45 departments, bureaus and offices. Each January, L.A. Controller Ron Galperin publishes the Comprehensive Annual Financial Report (CAFR), which details the City’s financial health over the past fiscal year, and reports on revenues, expenditures, assets, liabilities, and department performance data.

The 400+ page report is also available in a brief and accessible online version that contains a data story, graphs and charts — all of which illustrate how taxpayer dollars are spent by the City. Along with the City’s Annual Budget and the City Administrative Officer’s financial status reports, the CAFR is fundamental to understanding the economic opportunities and challenges facing the City of Los Angeles.

“Los Angeles experienced revenue growth in the last fiscal year, but spending jumped significantly as well,” said Controller Galperin. “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.”

This issue of Galperin’s newsletter provides an overview of the CAFR, including findings, issues to watch, and data on City activities. Please read and share it with anyone who wants to know more about how the City of Los Angeles functions.

Read Galperin’s Annual Financial Report
What the City Earns and Spends
Over the past seven years, the City has experienced relatively strong economic growth and a general uptick in revenues. In fiscal year 2019, total City revenues increased by 13.7 percent to $18.2 billion, a marked improvement over the 4.6 percent increase a year earlier. Total revenues for governmental activities were $9.2 billion, with the remaining contributed by the City’s business-type activities, which are services for which the City charges customers, like utilities.

Overall expenses increased by 7.5 percent to $15.1 billion in FY19, much higher than the less than one percent increase in FY18. Given the employment agreements recently taken on by the City, it is clear that expenses will continue to grow this year and beyond.

View more financial highlights
Issues to Watch
Controller Galperin reports that the City’s finances are stable today, but to maintain growth and achieve the level of services Angelenos deserve, the City must remain thoughtful and prudent in its approach to financial management. The CAFR outlines a number of issues for the City to watch, including:

  • Salaries, benefits and pensions. While it is unclear whether City revenues will keep climbing, it is undeniable that expenses will go up when City employee pay and benefits increases kick in. Pension costs will also increase in the coming year because recent investment returns have dropped from nine percent to six, 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 percent funded. This will remain a cost to the City going forward, but Los Angeles is doing far better than other large cities. New York’s current unfunded liability is $108 billion, and Chicago and Houston are zero percent funded.
  • Housing and homelessness. Voters approved Measure HHH in 2016, a $1.2 billion bond to build 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. As noted in Controller Galperin’s October 2019 HHH report, 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 700+ special purpose funds to maintain parks, build affordable housing, pick up trash and much more. The overall balance of these funds has continued to grow, and the City needs to adopt a plan to manage them and ensure the money is used to meet community needs.
Learn more about special funds
How the City Serves You
In keeping with his commitment to transparency and accountability, Controller Galperin’s CAFR also includes more than 60 interactive “City Activities” charts and graphs that measure the quality of services in FY19 versus previous years. Highlights include:

  • The number of 3-1-1 calls increased, but wait times dropped. The 1.2 million Angelenos who called 3-1-1 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 one 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 — a 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.
View more City Activities
Around Town
Over the past few weeks, Controller Galperin joined community volunteers at the 2020 West Los Angeles Homeless Count, provided updates on the work of the Controller’s Office at the Echo Park Neighborhood Council Board of Governors Meeting, tested out L.A. County’s redesigned Voting Solutions for All People system that debuts in the March 3 primary election, met with LAPD Chief Michel Moore to discuss solutions to a number of City issues, and participated in the 121st Golden Dragon Parade hosted by the Chinatown Chamber of Commerce.
View more events
Stay Connected
For daily updates, follow L.A. Controller Ron Galperin on social media.
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