Can’t We All Count Better?

Even Los Angeles city Treasurer J. Paul Brownridge now admits that a $21-million overestimate of city revenues by his office was a “major breakdown.” Councilman Zev Yaroslavsky is blunter. “This was a horrendous act of incompetence and a horrendous act of unprofessional behavior,” he said last week when the error came to light.

This was no small miscalculation. The treasurer overestimated income from the city’s $2-billion investment portfolio, predicting $39.4 million in income this fiscal year; the city will net just $18 million. The discrepancy pushes the projected shortfall this year to $92 million, in a total city budget of $3.84 billion, and raises serious new concerns about how Los Angeles will maintain necessary services.

Though the continuing recession has caused the economic projections of other government agencies to sour, the size of this error and the treasurer’s failure to discover it until now are troubling. The assistant treasurer last week attributed the miscalculation to the city’s ongoing hiring freeze. The position responsible for tracking the city’s investment income has been vacant for several months, he said. Brownridge reported to the city controller that investment income had declined because of lower interest rates and a $100-million drop in the amount of money the city had available for investment. The shortfall became apparent in September, but the treasurer’s office did not determine its magnitude until late last month.

The varying explanations don’t satisfy the City Council. Nor should they.

Last week the council approved a motion calling for an independent audit of the methods used by the treasurer to allocate interest income among various special funds and the general fund. The results of that audit are due Friday. Yaroslavsky has also said that the Budget and Finance Committee, which he heads, will conduct a wider review of the treasurer’s office and of Brownridge’s own performance. Both inquiries are very much in order.

But meanwhile, the council must cover the deficit--which, because of state budget cuts and sagging tax receipts, had ballooned to $71 million even before this error appeared. The $21-million error has prompted calls for tax hikes and layoffs in some departments to prevent new police and fire cuts. But first, the city must get its fiscal house in order.