L.A. Controller Releases City’s Annual Financial Report, Warns of Rising Expenses
Includes Performance Metrics on 60+ City Services
LOS ANGELES – L.A. Controller Ron Galperin today released the City’s Annual Financial Report for fiscal year 2019, which details L.A.’s finances and raises a number of issues to watch. The 400+ page report is also available in a brief and accessible online version that contains a data story, graphs and charts, all of which illustrate how taxpayer dollars are spent by the City. Explore the report at lacontroller.org/cafr2019.
“The City experienced revenue growth in the last fiscal year, but spending jumped significantly as well,” said Controller Galperin. “We know that the cost of providing neighborhood services will continue to rise, and the potential for a slowing economy should never be far from our minds. The City must be disciplined in its budgeting, grow its reserves, and manage its special funds more transparently.”
In FY19, total City revenues increased 13.7 percent to $18.2 billion, due to money coming in from the City’s airports, harbor and water and power utility, along with strong growth in property tax, sales tax and accrued grant revenues. Overall expenses went up by 7.5 percent to $15.1 billion, largely from higher salaries and benefits.
Issues to watch
- Salaries, benefits and pensions: While it is unclear whether City revenues will keep climbing, it is undeniable that expenses will go up as recently adopted City employee pay and benefits increases kick in. Pension costs will also increase in the coming year because recent investment returns have dropped from nine percent to six, a number lower than the City’s target rate of return.
- Retiree health care: The City’s retiree health benefits are a net liability of $2.8 billion and are currently 68 percent funded. This will remain a cost to the City going forward, but Los Angeles is doing far better than other large cities. New York’s current unfunded liability is $108 billion, and Chicago and Houston are zero percent funded.
- Housing and homelessness: Voters approved Measure HHH in 2016, a $1.2 billion bond to build thousands of homeless housing units; in FY19, the City issued $276 million in debt and spent $58 million. The total issuance to date is now $362 million and $110 million has been spent. As noted in Galperin’s October 2019 HHH report, the City must continue to look for ways to build homeless housing faster and more efficiently to keep pace with the crisis.
- Special funds: The City relies on 700+ special purpose funds to maintain parks, build affordable housing, pick up trash and much more. The overall balance of these funds has continued to grow, and the City needs to adopt a plan to manage them and ensure the money is used to meet community needs.
City performance metrics
In keeping with his commitment to transparency and accountability, Galperin also posted online more than 60 interactive charts and graphs that measure the quality of City services in FY19 versus previous years. Highlights include:
- The number of 3-1-1 calls increased, but wait times dropped. The 1.2 million Angelenos who called 3-1-1 waited an average of 2 minutes and 54 seconds before getting served in FY19, a decrease of two full minutes from the year prior, even though 281,259 more calls came in.
- Library visitors decreased, but one million more materials got checked out. The total number of library visitors dropped for the fifth straight year, yet the number of library materials checked out jumped to nearly 17.2 million in FY19 — a million more than FY18.
- Street resurfacing increased, but sidewalk repairs decreased. In 2019, 60 more lane miles of streets were resurfaced over the year prior, and 313,648 square feet of sidewalks were repaired, 15,000 fewer square feet than the year prior.
- Public pool attendance increased, while the number of people playing team sports plummeted. Attendance rose at City pools by more than 200,000, but team sports participants fell from 75,306 in FY18 to 55,570 in FY19, down from a high of almost 102,000 in FY13.
Check out all the City metrics and read the CAFR at lacontroller.org/cafr2019 or https://lacontroller.org/financial-reports/cafr-2019/.