The City Budget
1. What is the size of the City's operating budget?
2. When is the City's fiscal year?
3. Where do the City's revenues come from?
4. What does the City spend its money on?
5. What is the budget process?
6. What are some of the challenges facing the development of the City budget?
7. How can I contribute input in the development of the City budget?
What is the size of the City’s operating budget?
For the current fiscal year (2008-09), the City's adopted operating budget was $7.11 billion. However, due to the economic circumstances impacting the City, the budget estimates for FY2008-09 were lowered to around $6.63 billion. The Mayor’s proposed budget is $7.05 billion. The majority of the increase is attributed to Special Funds.
When is the City’s fiscal year?
The City's fiscal year (FY) begins on July 1 and ends on June 30.
Where do the City’s revenues come from?
The City collects revenue from over 20 different sources. A little less than a third (63%) of the City's total revenue comes from General Fund sources that are considered unrestricted including local property taxes, sales taxes, business taxes, and utility user taxes.
The remaining portion (37%) of total revenue comes from special fund revenues that must be spent for specific purposes such as special taxes on gas and Federal and State grants, as well as restricted General Fund sources such as fee-based services.
What does the City spend its money on?
As a full-service city, the City of Los Angeles is responsible for providing police protection, fire services, parks, libraries, transit services, sidewalks, trash disposal, public works services, and a variety of other essential services at the level and quality expected and deserved by its residents.
Special fund monies are dedicated to specific purposes such as sanitation equipment, traffic congestion mitigation, sewer construction, storm water mitigation, and the City's contribution to rail transit.
Some of the General Fund monies are also restricted for grant supported activities, fee-based services such as animal services, permitting, and building inspections.
The unrestricted General Fund monies are expended as shown in the chart below:
The budget process begins in the fall when the Mayor submits a Policy Letter to all Departments outlining his budget goals for the coming year. In December City departments, after reviewing the input of neighborhood council budget priorities, submit their budgets to the Office of the Mayor and the CAO. This is followed by a period of collaborative decision-making where the CAO, community representatives, and the City Council assist the Mayor in formulating the Mayor's Proposed Budget. The Mayor then submits the Proposed Budget to City Council on or before April 20.
Click here to view the full Budget Calendar.
What are some of the challenges facing the development of the City budget?
City revenues are sensitive to changes and trends in the macroeconomy. Instability in the banking sector and credit markets; declining house values and increasing foreclosure rates; rising unemployment and declining consumer confidence all hit City revenues hard. The financial backdrop for this year’s budget is a dramatic recessionary spiral. Consumer confidence is barely higher than the all time low reached in February 2009. In the last quarter of 2008, the U.S. economy (Gross Domestic Product) shrank by 6.3%—the steepest decline since 1982. Since the current recession began, in December 2007, the United States has lost more than five million jobs—two million of which disappeared in the first months of 2009. Similar economic contractions and job cuts have occurred around the world, creating an international dynamic of economic recession that has hit hard all sectors and income groups across the United States. Since July 2007, over 1.3 million homes across the nation have gone into foreclosure—significantly reducing household wealth and exacerbating the insecurities that grip our economy and our homes.
In many respects, we are in uncharted economic waters, which has made forecasting, always an imperfect art, all the more so. From experience over the last year, coupled with myriad economic forecasts and trend data, we can, however, glean that:
- The coming fiscal year will be an especially tough and very challenging one for individuals, families and businesses and for the municipal government of Los Angeles;
- An upturn in employment will likely lag the upturn in the rest of the economy;
- The jobs that return will be different than those lost; and
- The recovery will be gradual.
How can I contribute input in the development of the City budget?
Participate in your Neighborhood Council's discussion about the city budget and make your voice heard in your local community. The Neighborhood Councils also help shape the City budget.
The Neighborhood Councils are a key part of the system of reforms approved by voters in 1999. Since 2001, Neighborhood Councils all over the City of Los Angeles have been giving voice to community needs and telling the Mayor how they would like to see the City budget spent. Now is the time for you to get involved with your Neighborhood Council and make sure that your local leaders-and your Mayor-hear your voice.
For more information on your local Neighborhood Council and to find out when it will discuss the City budget, go to www.lacityneighborhoods.com or call 1-866-LA-HELPS.