Los Angeles Budget Challenge

Transcription

1 Los Angeles Budget Challenge 2013 Please mail your completed survey to: Office of Neighborhood and Community Services Mayor Antonio R. Villaraigosa ATTN: NCS, Amanda R. 200 N. Spring St., Room 303 D Los Angeles, CA Or drop off your completed survey at one of the following locations between 9am and 5pm: City Hall Office of Mayor Antonio R. Villaraigosa Mayor's Receptionist Desk ATTN: NCS, Amanda R. 200 N. Spring St., Room 303 Los Angeles, CA Van Nuys City Hall ATTN: Mayor s Office, NCS, Amanda R Sylvan Street, Rm 211 Van Nuys, CA *Surveys must be postmarked or dropped at off at City Hall or Van Nuys City Hall no later than Wednesday, February 27, Survey results will be posted on in March 2013.

2 YOUR CHALLENGE Balance the City of Los Angeles' Budget Mayor Antonio R. Villaraigosa invites you to take the Los Angeles Budget Challenge. Developed with input from the City's Neighborhood Council Budget Advocates, the survey gives you the opportunity to share your priorities for balancing the City of Los Angeles' budget. For the next Fiscal Year, the City of Los Angeles projects a $216 million budget gap. Over the coming months, Mayor Villaraigosa will review opportunities to build upon recent efforts to improve the City's fiscal sustainability. Your participation will assist Mayor Villaraigosa as he prepares the Fiscal Year Proposed Budget, which will be released in April For information about the City of Los Angeles' budget and previous actions taken to balance the budget, view the attached handout City of LA Budget. To take the survey online, please visit: Where do these policy options come from? Links for Budget Share your thoughts The Budget Challenge is a budget balancing simulation. Budget amounts for each policy option are estimates based on preliminary budget targets developed by the Mayor in anticipation of a $216 million deficit for Fiscal Year (FY) For more information, please view the Mayor s Fiscal Year Budget Policy Letter linked here: bpl, which directed City Departments to submit budget proposals that meet preliminary reduction targets. City of LA Budget bb1 Budget Summary Book bb2 The FY12 13 Adopted Budget bb3 The City s Financial Status bb4 Mayor Villaraigosa welcomes you to share your ideas about the City's budget and operations. Please use the comment boxes available throughout the survey to share your thoughts and concerns about budget balancing options and about City services in general. Page 1 of 20

3 Before you begin Please tell us about yourself Zip Code: Neighborhood Council Affiliation (optional): I am a Neighborhood Council Board Member (optional): Yes No Budget Priorities Rank your budget priorities. (Please Note: The City of Los Angeles is a full service city, but is not responsible for all local government services such as K 12 education, health services, and highway construction and maintenance.) High Low Economic Development and Private Sector Job Creation (Includes Business Assistance, Code Enforcement, City Planning, Job Training, Affordable Housing, and Homeless Services) Fire Services (Includes Rescue and Emergency Medical Services, Fire Prevention, and Arson Investigation) Fiscal Sustainability (Includes Stable Reserve Fund, Streamlined Central Administration Functions, Alternative Service Delivery Models, Consolidation of Services, and Reform of Employee Compensation, Pension and Benefits) Improved Infrastructure (Includes Public Transit, Signal Synchronization, Parking Enforcement, Sidewalk Repair and Street Improvements) Livable Neighborhoods (Includes Library Services, Recreational Services, Human Welfare Services, Arts and Cultural Programs, Sanitation, and Environmental Sustainability Efforts) Police Services (Includes Crime Prevention, Crime Investigation, Patrol Services, and Traffic Enforcement) Priority 1 Priority 2 Priority 3 Priority 4 Priority 5 Priority 6 Other (please specify and indicate priority): Page 2 of 20

4 Long Term Initiatives to Reform City Government Note: While these reforms may generate substantial cost savings and increased revenue in future years, they require additional study and therefore would not assist with balancing the FY General Fund Budget. Over the past several years, the City has implemented a variety of measures that have significantly reduced the structural deficit. These measures include reforming City employee pension plans, reducing the City workforce by over 5,000 positions, improving the City's billing and revenue collections processes, and strictly limiting the hiring of new employees. To ensure that the City continues on this path to fiscal sustainability, the Mayor has instructed the City Administrative Officer to conduct a comprehensive review of various opportunities to reduce the City's long term structural deficit, the Mayor has instructed the City Administrative Officer to conduct a comprehensive review of various opportunities to reduce the City's long term structural deficit. While the above listed reforms can potentially generate substantial cost savings in future years, they require additional study and therefore would not produce savings in the short term. Furthermore, reforms to employee pay and benefits are subject to negotiations with the City's labor unions. To view the Mayor's memo to the City Administrative Officer, please visit the following link: bgrd1 Options (choose as many as you like or none at all) REFORM EMPLOYEE HEALTH CARE Pursue opportunities to reduce the cost of employee health care. This may include increasing co pays, utilizing a lower cost rate for health subsidies, and increasing employee contributions towards healthcare premium costs Increasing employee contributions to health benefits City employees are already contributing into their would be structural savings to the City. The City would be healthcare premiums and paying higher co pays. The City able to maintain service levels and avoid potential should operate more efficiently and find other ways to layoffs. balance the budget. REFORM EMPLOYEE COMPENSATION Pursue opportunities to modify employee compensation levels. This may include reducing civilian employees' starting salaries, modifying automatic salary step increases, and eliminating pay for non federal City holidays. The City should reform the existing civil service The City should continue its current civil service structure. compensation structure. It should be based on a merit Salary increases are fixed and automatic based on service system rather than automatic salary increases based on time. time. REFORM WORKERS COMPENSATION Pursue additional opportunities to reduce workers' comp costs. This may include investing additional resources to prevent and investigate workers comp claims and negotiating with labor unions to reduce Injured on Duty rate to the State's lower cost rate. The City needs to reform its workers compensation City employees are already contributing into their benefits. benefits. Currently a city Employee receives 100% of its Reducing the workers comp rate would reduce employees salary for 52 weeks as opposed to the 2/3 gross rate with benefit further. The City should operate more efficiently and a ceiling of $52,546 annual. find other ways to balance the budget. Additional long term initiatives on the following page Page 3 of 20

5 Long Term Initiatives continued Note: While these reforms may generate substantial cost savings and increased revenue in future years, they require additional study and therefore would not assist with balancing the FY General Fund Budget. Options (choose as many as you like or none at all) REFORM RETIREE PENSIONS Further pursue opportunities to reform retiree pensions. This may include modifying automatic cost of living adjustments to post employment benefits for retirees. The City should continue to reduce the cost of retiree Retirees have already paid for their benefits into the City. benefits. This would help to reduce the structural deficit They are now on a fixed income and should be without impacting service levels. compensated what was promised to them. EXPAND STRATEGIC OUTSOURCING Expand the use of legal and fiscally prudent opportunities to contract out City services, including but not limited to ambulance transport, information technology, and street maintenance services. The City should increase its utilization of strategic Outsourcing City services requires additional administrative outsourcing for the provision of City services when oversight. Furthermore, the quality and affordability of City appropriate. Partnering with non City entities can services may be impacted. provide the City with specialized expertise and allow it to address unanticipated peaks in workload. NEW ECONOMIC DEVELOPMENT MODEL Establish a new model for organizing and delivering services that will help create/retain jobs in Los Angeles and generate investment in under serviced communities. While various City departments provide services related The creation of an economic development model will to local economic development, a new economic require new costs for staff, equipment, facilities and other development model will allow the City to make a expenses. While the City may be able to streamline its concerted effort to create new jobs, attract new business existing resources to create this new model, the costs may and industries, maximize the City's assets, and increase increase City's structural deficit and any potential revenue General Fund revenue. growth will most likely be realized in the long term. Page 4 of 20

6 Spending Options: Animal Services MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $20 million) for Animal Services, which reflects an overall reduction of 1% since The department should continue to look for efficiencies. Explore the potential public private partnerships with other organizations. REDUCE $2.0 MILLION The department has sustained cuts in the past and absorbing additional cuts will create inefficiencies and potential liabilities. The City should look at reductions through other efficiencies. Reduce funding for animal shelter operations, spay/neuter programs, and animal licensing. This may result in the closure of an animal shelter and in increased euthanization of animals in the care of the City. Note: Decreasing funding may result in layoffs. The City has a significant structural gap between expenditures and revenues. It cannot maintain the status quo. The City should continue to reduce funding for Animal Services and explore public private partnerships with other organizations. INCREASE $2.0 MILLION Reductions to the department will create inefficiencies, potential liabilities and the probable closure of an animal shelter. The City should not risk increasing animal euthanizations. The City should make reductions to other services. Increase funding to support animal shelter operations, spay/neuter programs, and animal licensing. The department has been cut 20% over the last 5 years. Increasing funding will allow the department to properly staff its operations. The department should be treated like all other departments and continue to implement efficiencies and further cost reductions. The Department of Animal Services ( operates and maintains animal shelters, issues dog and equine licenses, participates in the County's rabies control program, issues permits, and conducts inspections for the operation of animal establishments. In 2011, the Department partnered with the non profit organization, Best Friends Animal Society ( for the operation of the City's Northeast Valley Shelter. The unique partnership has allowed the City to maintain services at the shelter at a reduced cost to the City. The Fiscal Year Budget includes a total appropriation of $20 million (all of which is provided by the General Fund) to the Department of Animal Services. Page 5 of 20

7 Spending Options: City Attorney MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $94 million) for City Attorney operations and services, which reflects an overall reduction of 4% since The City Attorney provides an essential City service. To prevent severe service reductions, the City should Further reductions may create liabilities for the City make modest cuts to all departments, including the City and would impair the City Attorney's ability to file Attorney's Office. cases and to render legal opinions in a timely manner. REDUCE $9.4 MILLION Reduce funding for legal counsel services to the City Council and City departments. This may create delays in the review of contracts and ordinances, and may place the City at greater risk of liability lawsuits. Note: Decreasing funding may result in layoffs. Cuts to City Attorney's budget are necessary to Funding for the City Attorney has already been reduced. prevent severe service reductions to core departments Further cuts will impair the Office's ability to file cases such as the Police Department and Fire Department. and render legal opinions in a timely manner. Any further reductions could pose a liability to the City. INCREASE $9.4 MILLION Increase funding for legal counsel services to the City Council and City departments. This may improve the Office s capacity to represent the City in cases related to workers' compensation claims and litigation; to examine City contracts and ordinances; and to prosecute misdemeanors. The additional funds would allow the department to Restoring funding for the City Attorney's Office will add restore the 34 furlough days (unpaid time off) to the City's budget shortfall. The City should continue currently imposed on attorney positions in the office. to reduce its expenditures to all departments, including Eliminating these 34 furloughs would result in the City Attorney's Office. increased services. The City Attorney ( acts as legal advisor to the City of Los Angeles, the City Council, all Board and Commission Officers, and City Departments. The City Attorney renders legal opinions construing federal and State laws, the Charter and City ordinances. Additionally, the City Attorney represents the City, its boards, officials and officers in all civil trials and legal proceedings before all courts, as well as State and Federal Committees and Commissions. The Fiscal Year Budget includes a total appropriation of $98 million (of which $94 million is provided by the General Fund) to the Office of the City Attorney. For the current year, the Budget included 34 furlough days (unpaid time off) for over 400 employees in the City Attorney s Office. Page 6 of 20

8 Spending Options: Constituent Services, Legislative Analysis & Policy Determination MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $32 million) for Mayor, Council and Neighborhood Councils, which reflects an overall reduction of 36% since Our City leaders were elected to implement effective public policies that improve conditions in the City. Further reductions will make it difficult for them to perform their Charter mandated responsibilities and to address constituents' requests and concerns in a timely manner. REDUCE $3.2 MILLION Our elected officials and Neighborhood Councils should be subject to budget cuts just like all other City departments. It would be unfair to exempt our City leaders from budget reductions while other municipal services continue to be cut. Reduce funding for constituent services, legislative analysis & policy determination. This may impact the Mayor, Council & Neighborhood Councils abilities to support community events and services, to respond to constituent requests and to conduct legislative analysis required for decision making. Note: Decreasing funding may result in layoffs. Public officials must lead by example and trim their budgets. Without modest cuts to Neighborhood Councils and elected officials offices, the City will be forced to make severe reductions to other critical services. INCREASE $3.2 MILLION Public officials need sufficient resources to respond to constituent requests and to carry out legislative analysis required to implement good public policy. Further cuts impact our leaders' capacities to improve public safety, health, and economic conditions in Los Angeles. Increase funding for constituent services, legislative analysis and policy determination. The Mayor, Council & Neighborhood Councils provide critical services to residents and other City stakeholders. We must provide public officials with sufficient resources needed to lead our City and place it on a more fiscally sustainable path. Restoring funding for the Mayor's Office, the City Council and Neighborhood Councils will add to the City's budget shortfall. The City should continue to make budget cuts to all departments, including our public officials. As the elected head of City government, the Mayor ( recommends the annual budget, submits proposals to the Council, approves or vetoes ordinances passed by the Council, and actively enforces the City's ordinances. The City Council ( is the governing body of the City and enacts ordinances subject to the approval or veto of the Mayor. The Council adopts or modifies the budget proposed by the Mayor. The Council is provided technical assistance by the Chief Legislative Analyst's Office. Neighborhood Councils ( are city certified local groups comprised of people who live, work, or own property in a neighborhood. Currently, the there are 95 Neighborhood Councils in the City of Los Angeles. In Fiscal Year , each Neighborhood Council received public funds of $37,000 to support their activities, which may include creating events and programs that address the unique needs of their community. The Department of Neighborhood Empowerment ( is responsible for developing and supporting the citywide system of Neighborhood Councils. The Department's mission is to promote increased participation in government and to make government more responsive to local needs through the Neighborhood Council system. The Fiscal Year Budget includes a total appropriation of $32 million (the vast majority of which is provided by the General Fund) to the Mayor's Office, City Council, Neighborhood Councils and the Department of Neighborhood Empowerment. Page 7 of 20

9 Spending Options: Employee Compensation MAINTAIN STATUS QUO Provide funding for City employees' cost of living adjustments (COLAs) that have been deferred since The City should fulfill its promise to employees by funding previously negotiated COLAs. Employees have already sacrificed by agreeing to defer the COLAs, to contribute more into their healthcare premiums, and to pay higher co pays. The City should operate more efficiently and find ways to balance the budget other than on the backs of employees. REDUCE $22.3 MILLION It would be irresponsible for the City to raise employee salaries while it is facing a significant imbalance between its expenditures and revenues. Not funding the COLAs will allow the City to reduce the FY shortfall by over $20 million. Do not provide funding for contractual cost of living adjustments (COLAs) to civilian employees. Note: This policy option is subject to labor negotiations and may result in litigation. Not funding the COLAs to civilian employees will allow the City to avoid a substantial increase to its expenditures. By choosing not to fund the COLAs, the City would be able to avoid significant service reductions and potential layoffs needed to balance the budget. The City should not balance the budget with uncertain cost savings. If the City does not fund the COLAs for civilian employees, it is very likely that labor unions will legally challenge the City for failing to fulfill its contractual obligation to employees. Should the City lose in court, it will be forced to pay for the COLAs. The City's primary costs are associated to salary and benefits. Since 2009 the City has undertaken unprecedented efforts to address its rising employee compensation, benefits and pension costs. These efforts include, but are not limited to: Modifying civilian pensions by raising the retirement age from 55 to 65, reducing the maximum pension allowance from 100 percent to 75 percent of an employee's final compensation, and eliminating pension spiking by setting an employees' pension on a 3 year salary average as opposed to one year. Requiring employees to contribute 2 percent to 4 percent (from zero) of their pay for retiree health benefits, and freezing benefits for employees not contributing. Eliminating over 5,000 positions, resulting in the smallest civilian workforce since Imposing a 20 percent salary reduction for new sworn police officers in addition to reducing retirement benefits. For more information about employee labor agreements, visit the following website: Page 8 of 20

10 Spending Options: Fire Suppression & Prevention MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $506 million) for Fire Department operations and services, which reflects an overall reduction of 9% since Staff and resource reductions to the Fire Department put the lives of residents and firefighters at risk. The City should support the Fire Department's current funding level. REDUCE $3.1 MILLION The department currently has insufficient resources. Budget reductions will create inefficiencies and potential liabilities. The City should look at reductions to other departments. Reduce funding for Fire Department operations and services. This may impact fire prevention services as well as fire suppression and emergency ambulance response times. Note: Decreasing funding may result in layoffs. The Los Angeles Fire Department City should develop a plan to more cost effectively deploy fire fighters and to civilianize certain Fire Department functions. INCREASE $3.1 MILLION Staff and resource reductions to the Fire Department will increase firefighter and ambulance response times, which puts the lives of residents at risk. Increase funding for Fire Department operations and services. This may increase firefighter deployment levels. The Fire Department is currently operating with insufficient resources. The City should increase support to the department to protect public safety. Restoring funding for the Fire Department will add to the City's budget shortfall. The City should continue to make budget cuts to all departments, including the Fire Department. The Los Angeles Fire Department ( provides rescue and emergency medical services; controls and extinguishes dangerous fires; protects life and property from fire risks by inspecting buildings for fire hazards and enforcing fire prevention laws; carries on a fire prevention educational program; and investigates suspected cases of arson. The Fiscal Year Budget includes a total appropriation of $513 million (of which $506 million is provided by the General Fund) to the Los Angeles Fire Department. Page 9 of 20

11 Spending Options: Human Welfare Programs MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $48 million) for Human Welfare programs, which reflects an overall increase of 9% since These programs are integral to the public safety, economic vitality, health and well being of many City residents. The City should maintain the current funding level for Human Welfare Programs. REDUCE $4.8 MILLION To prevent severe service reductions to other City functions, the City should make modest cuts to all services including human welfare programs. Reduce funding for services for low income seniors, persons with disabilities, at risk youth, the homeless, as well as gang prevention and intervention services. Note: Decreasing funding may result in layoffs. Reducing funding to human welfare programs is necessary to balance the budget. Human welfare programs should continue to streamline their operations to accommodate modest cuts to their budgets. INCREASE $4.8 MILLION These programs help to ensure that the City of Los Angeles supports the health, wellbeing, public safety, and economic vitality of all of its residents. The City should prioritize human welfare. Budget cuts should be made elsewhere. Increase funding for services for low income seniors, persons with disabilities, at risk youth, the homeless, as well as gang prevention and intervention services. These programs provide unique services that enrich the lives of residents. The City should increase funding for these programs. While human welfare programs are important to the well being of Los Angeles communities, the City must prioritize its more essential functions, such as public safety and basic street repair. The City of Los Angeles provides a number of human welfare programs, including services for low income seniors, persons with disabilities, at risk youth, the homeless, as well as gang prevention and intervention services. These services are provided by the the Department of Aging ( Department on Disability ( Community Development Department ( the Housing Department ( Los Angeles Homeless Services Authority ( the Office of Gang Reduction and Youth Development ( and several nonprofit agencies that contract with the City. The Fiscal Year Budget includes a total appropriation of $129 million (of which $48 million is provided by the General Fund) to these departments and programs. Page 10 of 20

12 Spending Options: Police Services MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $1.22 billion) for Police Department operations and services, which reflects an overall reduction of 5% since The Police Department is already operating with insufficient resources. Ensuring public safety should be the City's number one priority. Cuts should be made elsewhere. REDUCE $23.1 MILLION Over 25% of the City's total General Fund is spent on the Police Department. The department should find ways to be more efficient. Reduce funding for Police Department expenses and for civilian staff support of crime prevention and suppression functions. Note: Decreasing funding may result in layoffs. Crime levels in Los Angeles are at a historic low. The Police Department should be able to continue to provide adequate public safety services with fewer resources. The department should reassess its current deployment model to operate more efficiently. INCREASE $23.1 MILLION Reducing funding for the Police Department will jeopardize public safety. The department is already operating with insufficient resources and should not be cut. Increase funding for Police Department expenses and for civilian staff support of crime prevention and suppression functions. Currently, the Police Department is operating with insufficient resources. We must invest in the department to ensure public safety, which is essential to the local economy and residents' quality of life. Increasing funding for the Police Department will add to the City's budget shortfall. The City should continue to make budget cuts to all departments, especially the City's largest department. The Los Angeles Police Department or LAPD ( is provided a General Fund budget of $1.22 billion to safeguard the lives and property of the people it serves, to reduce the incidence and fear of crime, and to enhance public safety while working with the City s diverse communities to improve quality of life. The Mayor and the Police Chief have pledged their commitment to crime reduction by maintaining the ranks of the LAPD. As of January 1, 2013, the number of police officers has increased to 10,023, an increase of over 700 officers since During this same period, total Part 1 Crimes (Homicide, Robbery, Rape, Aggravated Assault, Burglary, Grand Theft Auto and Theft from Motor Vehicles) have decreased by 27%. For the 2012 End of Year Summary on Crime Statistics, please view the following link: The Fiscal Year Budget includes a total appropriation of $1.26 billion (of which $1.22 billion is provided by the General Fund) to the LAPD. Page 11 of 20

13 Spending Options: Recreation & Parks MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approximately $99 million) for Recreation and Parks operations and services, which reflects an overall reduction of 24% since Recreation and Parks builds healthy community by providing residents with safe facilities and a variety of affordable programs. The City should maintain the department's current funding level. REDUCE $4.0 MILLION The City is still facing a structural deficit. To balance the budget, the City should continue to make modest cuts to all departments, including Recreation and Parks. Require the department to fully reimburse the General Fund for overhead costs. This may reduce maintenance and landscaping of facilities and parks, reduce programming for at risk youth, and reduce funds available for capital projects. Note: Decreasing funding may result in layoffs. Reducing funding citywide, especially for non core services, is necessary to eliminate the City's deficit. INCREASE $4.0 MILLION Further reductions to Recreation and Parks will impact the well being of youth, families and adults who rely on safe and affordable recreational services in their neighborhoods. Reductions should be made elsewhere. Increase funding to improve maintenance of recreational facilities and parks, to increase recreational programming hours, and to replace outdated equipment. The department provides valuable services that not only enrich the lives of residents, but also promote public health and prevent crime in local neighborhoods. The City should prioritize these core services. While recreational services are important to the wellbeing of Los Angeles communities, the City must prioritize its more essential functions, such as public safety and basic street repair. The Department of Recreation and Parks ( manages over 15,000 acres of parkland with over 400 parks, 60 public pools, eleven lakes, more than 180 recreation and community centers, 13 golf courses, and numerous cultural centers and museums. The Department offers a wide range of programs and services including recreation programs at park facilities, after school recreation classes, summer programs, and senior citizen services. Many of these programs are dependent on the work of some 15,000 active volunteers. The Fiscal Year Budget includes a total appropriation of $99 million (all of which is provided by the General Fund) to the Department of Recreation and Parks. Note: This amount accounts for the Department's reimbursement to the General Fund for overhead costs. Page 12 of 20

14 Spending Options: Support Services MAINTAIN STATUS QUO FUNDING Maintain current General Fund funding (approximately $371 million) for support services, which reflects an overall reduction of 25% since These services include information technology support, financial support, fleet and fuel operations, custodial and security services for City facilities, administrative and budget analysis, auditing and accounting services, and personnel services. Most City services rely on the adequate provision of general administration and support. The City should not impose further cuts in funding for these functions. REDUCE $31.1 MILLION The City should continue to make modest cuts to all departments, including those that provide general administration and support to other departments. Reduce funding for information technology support, financial support, fleet and fuel operations, custodial and security services for City facilities, administrative and budget analysis, auditing and accounting services, and personnel services. Departments that perform general administration and support services should be able to streamline their operations to absorb modest budget reductions. INCREASE $31.1 MILLION The City has already implemented significant efforts to streamline general administration and support functions. Departments depend on general admin and support to effectively provide direct services. The City should protect support services from severe cuts. Increase funding for information technology support, financial support, fleet and fuel operations, custodial and security services for City facilities, administrative and budget analysis, auditing and accounting services, and personnel services. General administration and support is integral to the delivery of most City services. The City should ensure that departments that provide general administration and support have the resources to perform both effectively and efficiently. Cuts should be made to administration and support functions in order to mitigate severe cuts to other more essential services. The City must provide internal services to support its 31,000 employees and to assist City departments, such as the Police Department and Fire Department, in providing services to over 4 million residents. General administration and support include information technology support, financial support, fleet and fuel operations, custodial and security services for City facilities, administrative and budget analysis, auditing and accounting services, and personnel services. The Fiscal Year Budget includes a total appropriation of $438 million (of which $371 million is provided by the General Fund) to the City Clerk ( City Administrative Officer ( City Controller ( Department of General Services ( Information Technology Agency ( Office of Finance ( and the Personnel Department ( Page 13 of 20

15 Spending Options: Transportation, Streets & Infrastructure MAINTAIN STATUS QUO FUNDING Maintain current General Fund support (approx. $145 million) for Transportation, Streets and Infrastructure, which reflects an overall reduction of 36% since Maintaining our roads and infrastructure and ensuring an effective transportation system are integral to the safety and well being of residents. The City should maintain funding levels for these projects and operations. REDUCE $14.5 MILLION Reducing funding to departments citywide is necessary to balance the budget. The City should be able to streamline transportation, streets and infrastructure operations to absorb modest budget reductions. Reduce funding for Transportation, Streets and Infrastructure. This may result in reduced street maintenance and pothole repair as well as deferred capital infrastructure projects. Note: Decreasing funding may result in layoffs. Without meaningful cuts to large City departments like LADOT, the City will be unable to fix the structural imbalance between City revenues and expenditures. INCREASE $14.5 MILLION The City must continue to invest in transportation, streets and infrastructure. These services and operations are necessary to the quality of life and vitality of the City's business community. Increase funding for Transportation, Streets and Infrastructure. This would provide support for priority capital infrastructure projects and increased street maintenance and pothole repairs. The City's economic recovery depends on a wellmaintained infrastructure and a high quality transportation system. The City should support efforts to meet these goals by maintaining funding levels in this category. The City simply cannot afford to increase funding for operations and projects at this time. To ensure the City's fiscal sustainability and its ability to provide quality services well into the future, the City must continue to implement efficiencies and budget reductions. The City manages a variety of infrastructure projects and transportation and street services. These include, but are not limited to: the maintenance of roadways, bridges, and sidewalks; enforcement of parking and taxicab regulations; provision of school crossing guard services; maintenance of traffic signals and street signage; administration of construction permits for public works; and the preparation of environmental assessments and engineering designs for public improvements. The Fiscal Year Budget includes a total appropriation of $587 million (of which $145 million is provided by the General Fund) to the Board of Public Works ( the Bureau of Contract Administration ( the Bureau of Engineering ( the Bureau of Street Services ( the Department of Transportation ( and the Capital Improvement Expenditure Program. Page 14 of 20

16 Spending Options: Other MAINTAIN STATUS QUO Maintain current management structure for the Los Angeles Zoo and Convention Center. Altering the management structure for the Los Angeles Zoo and the Los Angeles Convention Center may lead to layoffs, less public accountability, and a reduction in service quality. The City should retain full control of the management and operations of the Zoo and the Convention Center. REDUCE $1.3 MILLION Implementing new operating models allow the City to reduce costs and prioritize funding for core services such as public safety, transportation and streets. Implement a new operating model for the LA Zoo that strengthens the City's partnership with the nonprofit, the Greater Los Angeles Zoo Association, and provides the Zoo with greater flexibility to implement entrepreneurial, revenue generating initiatives. A new operating model will allow the Zoo to improve its operations and to better compete with other tourist destinations in the Los Angeles region. INCREASE $4.1 MILLION A new operating model may impact the quality of animal care and the affordability of the Zoo for residents. The City must maintain animal care standards and protect affordable, recreational activities for its residents. Implement an alternative management structure for the Los Angeles Convention Centers that allows a private company to manage and operate the facility. Note: The City Administrative Officer reports that between $2.1 and $6.2 million in savings could be realized. The Budget Challenge uses the average, $4.1 million, for the purposes of this exercise. The City should take every opportunity to reduce its costs and improve the quality and efficiency of Convention Center services. Concerns over the impacts of public private partnerships can be addressed by structuring contracts in a manner that holds third party organizations accountable to the City's goals. There is no guarantee that a private company would be able to improve the LACC's operations. If management is turned over to a third party, employees may be laid off, operations may suffer and fees may sky rocket. The Los Angeles Zoo ( is home to more than 1,100 mammals, birds, amphibians and reptiles representing more than 250 different species of which 29 are endangered. In addition, the Zoo s botanical collection comprises several planted gardens and over 800 different plant species. The Zoo receives over 1.5 million people visitors each year. The Los Angeles Convention Center ( performs as an economic and jobs engine for the Los Angeles region by serving as a destination of choice for citywide conventions, exhibitions, tradeshows and high profile events. Over the past several years, the City has explored alternative service delivery models for the Los Angeles Zoo and Convention Center. Similar to the City's collaborative efforts with private organizations to run City animal shelters and cultural facilities, these models would allow the City to protect and improve municipal services while providing the City with fiscal relief. Page 15 of 20

17 Revenue Options: Licenses, Permits, Fees and Fines (choose one, both, or none at all) RAISE $6.0 MILLION Ensure all Licenses, Permits, Fees and Fines (fees for filming on City properties, credit card convenience fees, swimming pool fees; animal services licensing, etc.) are fully recovering the cost of administration. Modest increases to licenses, permits, fees and fines are necessary to ensure the fiscal sustainability of City service. RAISE $10.0 MILLION Businesses and residents in Los Angeles already pay high taxes. The City should not increase licenses, permits, fees and fines especially while we are just starting to recover from the global economic crisis. Improve street sweeping operations and increase revenue by imposing parking restrictions for more street sweeping routes. Vehicles parked in these areas during restricted times will be given a citation. (Note: Currently, the City does not restrict parking during street sweeping hours for all street routes). Clean streets are critical to the economic vitality and quality of life in Los Angeles. If restricting parking on more street sweeping routes will lead to cleaner streets and increased revenue, then the City should implement this policy option. Imposing more parking restrictions will limit parking availability in the City and may have negative impacts on the local economy. Furthermore, parking fines and fees are already too much of a burden for Angelenos. The City should not adopt this policy. For Fiscal Year , the City projects to generate $770 million from Licenses, Permits, Fees and Fines (LPFF). The majority of LPFF revenue comes from reimbursements from special funds and proprietary departments to the General Fund. For example, the Port of Los Angeles reimburses the General Fund for legal services provided by the City Attorney's Office. The rest of LPFF revenue comes from the payments made by individuals and businesses for licenses, permits, fees and fines issued by the City. For example, the Department of Animal Services charges fees to license dogs. Each year City Departments are required to develop fee increase proposals to ensure that the City is recovering the full cost of providing specific services. Page 16 of 20

18 Reserves: Tax Revenue (choose one, both or none at all) RAISE $6.0 MILLION Extend the Tax Amnesty Program that encourages unregistered business to remit uncollected Business Tax on gross receipts. Extending the Tax Amnesty Program will help generate additional business tax revenue while giving businesses the opportunity to pay delinquent taxes. RAISE $106.0 MILLION Extending the Tax Amnesty Program may create a disincentive for businesses to pay their taxes in the future. Some businesses may wait to pay their taxes until a new tax amnesty program is offered to avoid having to pay late penalties. Increase the sales tax rate by a half cent. Note: This policy option is estimated to generate over $200 million in annual revenue. In the first year of implementation, however, the City would realize only $106 million in new revenue from this measure. See background information below for more detail. Increasing the Sales Tax will provide substantial closure of the existing structural deficit while preventing severe cuts to City services and personnel. Angelenos are already burdened by recently approved State tax hikes. An additional increase to the sales tax will have a disproportional impact on low income families and individuals, and may endanger the City's local economy. Approximately $3.3 billion of the City's $4.5 billion General Fund Budget comes from tax revenue. California Proposition 218 requires that the City obtain voter approval of all new taxes or tax increases. *For the upcoming March 2013 primary election, the City Council has placed a measure on the ballot to increase the sales tax rate to 9.5%, which is equivalent to the tax rates in the City of Santa Monica and Culver City. Currently, the City of Los Angeles' sales tax rate is 9.00%, of which the City receives 0.75%. If the measure is approved, the City's share will increase to 1.25%. The sales tax measure is estimated to generate over $200 million annually in new revenue. However, the sales tax increase would not go into effect until October 1st, 2013 and would therefore generate only $106 million in revenue in Fiscal Year Page 17 of 20

19 Other Options: Reserve Fund MAINTAIN STATUS QUO Maintain the current the Reserve Fund balance of $225 million, which represents approximately 4.9% of the General Fund. A healthy Reserve Fund is critical to the City s fiscal sustainability. The City should protect the Reserve Fund rather then use it to balance the budget. REDUCE $22.5 MILLION The City needs to implement a variety of strategies to address the budget shortfall. Dipping into the Reserve Fund is a necessary budgetary strategy that allows the City to preserve essential services citywide. Dip into reserves set aside for emergencies and other unforeseen expenditures in order to balance the City's budget. Transferring funds from the reserves is a reasonable strategy that will help reduce the deficit without endangering the City s fiscal sustainability. The City should borrow from the reserve fund to mitigate layoffs until the economy recovers and revenues increase. INCREASE $22.5 MILLION Depleting the reserves to balance the budget is a onetime solution to an ongoing problem. Rather than endangering the Reserve Fund, the City should implement structural changes to its budget by reducing expenditures and generating new revenue. Continue to build the reserves so the City has sufficient funds set aside for emergencies and other unforeseen expenditures. The City should aim to meet its policy of maintaining a Reserve Fund that represents at least 5% of General Fund revenues. The City is facing a substantial budget gap. Growing the reserves will reduce funds available to support vital services such as public safety and street maintenance. The City has a Reserve Fund to assist with economic uncertainties, disasters and cash flow needs. The Reserve Fund is divided into two accounts, the Emergency Reserve and the Contingency Reserve. As of October 2012, the Reserve Fund balance was $225 million ($125 M in the Emergency Reserve and $100 M in the Contingency Reserve). The current Reserve Fund balance, which represents about 4.94% of General Fund revenues, falls short of the City's policy to maintain a Reserve Fund representing 5% of General Fund revenues. The City Administrative Officer ( and bond rating agencies advise against utilizing the Reserve Fund to balance the City's Budget because it reduces the amount of cash available to address economic uncertainties and natural disasters. Page 18 of 20

20 Other Options: Budget Stabilization Fund MAINTAIN STATUS QUO Do not utilize unanticipated current year revenue and savings to grow the Budget Stabilization Fund, which was created in 2008 to help stabilize revenue, supplement the Reserve Fund, prevent overspending during prosperous years, and maintain service levels during fiscally challenging times. The City has sustained severe budget cuts over the past five years. Instead of growing the Budget Stabilization Fund, we should utilize unanticipated current year revenue to restore funding for critical services and operations. REDUCE $55.0 MILLION It would be irresponsible for the City to use one time revenue and savings to restore services and operations. The City should use these funds to address the Fiscal Year budget shortfall. Utilize unanticipated current year revenue growth and savings to grow the Budget Stabilization Fund, which can then be used to prevent severe cuts next year and to address the General Fund shortfall. Using these funds to close the City's Fiscal Year budget gap is a responsible, fiscal policy. Many City Departments are operating with insufficient resources. The City should fund these Departments appropriately using any unanticipated revenues and savings. The City's general fund revenue is highly sensitive to changes in the State budget and in the overall economy. To address unanticipated revenue shortfalls, the City has made difficult, yet necessary decisions to reduce critical City services and operations. In 2008, the City created the Budget Stabilization Fund (BSF), to help stabilize revenue, supplement the Reserve Fund, prevent overspending during prosperous years, and maintain service levels during fiscally challenging times. According to the City's First Financial Status Report ( bb4), which was released in October 2012, the current BSF balance is $500,000. Page 19 of 20