L.A.’s new budget: a lot of loose ends

To say the budget adopted Monday by the Los Angeles City Council leaves a lot of loose ends is an understatement. Still on the table, despite the supposed completion of the 2010-11 spending plan, is the basic question of how the city is going to close its budget gap and replenish its reserve fund: Will it rely on more layoffs and program cuts, on the sale or lease of city property, on concessions from employee unions, on unexpected revenue that may turn up in the next several months, or on some combination of all those? It’s hard to fault the council for trying to minimize job and service reductions, if possible, but it’s worth remembering that the city budget is in such poor condition in part because the council and Mayor Antonio Villaraigosa waited too long to make corrections in the previous year’s budget. They cannot afford to make the same mistake again.

They also cannot afford to devote all of their attention over the next several months to making the current numbers pencil out. It is long past time for the mayor and the council to take this year’s lessons and hammer them into two essential plans: a recovery plan, so they know what to do once the economy recovers; and a strategic plan, so they have a set of principles to guide future decision-making. Without both, the city soon will be back in the same fix.

At first blush, their task as revenues recover may seem like a no-brainer. The city lost money and had to lay off employees and cut services; when the money comes back, it should rehire the workers and restore the programs it cut. Right?

Wrong. Restoration would be the simplest and most popular course, but it would merely repeat the management errors that got the city into its current trouble. Instead, city leaders should focus first on economic health in order to avoid future flirtations with insolvency. Maintaining a proper reserve fund is crucial, because it is one of the primary signals to lenders that the city has the means and the willingness to repay its obligations. That accomplished, the city must ensure that new revenue is devoted to programs that fit into a rational, well-thought-out and thoroughly discussed rebuilding plan and not for programs that happen to be politically popular at whatever time revenue becomes available.

A recovery plan should guide this mayor and council as revenues return to their former levels. A strategic plan should go further, establishing guidelines for this mayor and council, but also future city leaders, when the city begins to grow again. Such a plan need not tie anyone’s hands, and of course can always be modified. But there must be a plan against which Angelenos can judge any proposal for growing or shrinking funding, services and payroll. When we consider each new idea in a vacuum, it is far too easy to say “yes” — followed, in a downturn, by “oh no.”