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City at a Crossroads Report 020713 - Final

City at a Crossroads Report 020713 - Final

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City at a Crossroads Report 020713 - Final
City at a Crossroads Report 020713 - Final

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Published by: scprweb on Feb 07, 2013
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04/29/2014

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CAO File No. 0590-00098-4253Council File No. 12-0600Council District: All
CITY OF LOS ANGELES
City at a Crossroads
SUBMITTED BY
Miguel A. SantanaCity Administrative Officer
February 7, 2013
 
 
CAO File No. PAGE
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Table of Contents
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CAO File No. PAGE
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C
ITY AT A CROSSROADS
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RISIS MANAGEMENT OR STABILITY ANDREINVESTMENT
?
Under the steadfast leadership of the Mayor, the resolve of the City Council, and thesacrifice of city workers and residents, the City’s financial footing has beenstrengthened. The results are unprecedented: an 80 percent reduction in the structuraldeficit in four years, while maintaining crime at the lowest levels in decades.Moreover, the projected $216 million deficit for fiscal year 2013-14 is showing signs ofimprovement. Latest projections from the pension systems show that the reformsadopted are starting to bear fruit, resulting in a projected pension contribution that willbe $45 million less than what had been projected just one year ago. Pension projectionsfor outer years are due in the next quarter. Additionally, about $33 million has alreadybeen identified for deposit into the Budget Stabilization Fund, and unanticipatedrevenues this year may help the fund reach $70 to $80 million. These one-time fundswill bolster the City’s ability to continue critical services next year, although thechallenge to keep these services funded in 2014-15 will resurface. Finally, projectedrevenue growth is likely to continue to grow at a steady pace assuming that global andnational economic factors do not slow down LA’s own recovery.While we are starting to see the “light of the end of the tunnel”, the security provided bythis optimistic picture is still very fragile and not an accurate reflection of the structuralproblems that the city is facing. As long as growth in expenditures outpace increases inrevenue, future budgets will still rely on one-time revenue to close in the black, leavinglittle room for addressing service gaps, investment in the city’s infrastructure andadequate reserves to mitigate the looming legal and unforeseen liabilities.Moreover, much work remains to bring services and the quality of life to a levelAngelenos expect and that are reflective of a world class city. On the March, 2013 ballotvoters in Los Angeles will consider Measure A. If approved, the sales tax will increaseby one-half cent on the purchase of goods and services made within the City.Regardless of the outcome of the sales tax initiative, it is recommended that the policymakers launch a strategic planning process that reviews the progress made so far,identifies challenges and opportunities and most important, sets service level prioritieswith measureable outcomes. This strategic plan should be nimble and updatedregularly, but also provide direction for the next ten years.The path the City embarks on over the next few years is as important as the work thathas already been done during the last four. Should the increase in the sales tax besupported by the majority of the voters, the city's finances will be stabilized and thecity's policy makers will have the breathing room to make strategic decisions on whereand how to invest. The opening of all labor contracts over the next 36 months createsopportunities to provide stability to the City's workforce but may also put pressure on

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