Los Angeles budget chief issues positive fiscal outlook
Los Angeles city finances have taken a positive turn thanks to tightened fiscal policies and an improving housing market, the city’s chief budget analyst said.
A structural deficit of $327 million projected for 2014 has been revised downward to between $153 million and $242 million, according to a budget update released Thursday by City Administrative Officer Miguel Santana.
Santana attributed the improved numbers to agreements that hold down salary costs and trim pension benefits for new employees. It’s also possible that revenues will be higher than expected due to a stabilized housing market and stronger consumer demand, he said.
If the city stays within its means, the deficit can be eliminated by 2017, he wrote. “There is no question that 2013-14 is a turning point in the city’s financial standing.’’
But the rosy outlook comes with a few warnings. If Congress and President Obama continue to lock horns over the federal government’s budget and spending, the local economy could be affected, Santana said.
Closer to home, if raises are given to employees in upcoming negotiations, the structural deficit could once again spiral upward, he warned. That’s because the long-term fiscal plan assumes no pay increases for any employee group beyond 2014, he said.
Multiple labor contracts are set to expire in June 2014. Santana said it was “critical that the city continue to focus on controlling pension expenditures by controlling increases in employee salaries.”
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