L.A. Controller Urges Budget Restraint as Spending Set to Outpace Revenue Growth

LOS ANGELES — Today, L.A. Controller Ron Galperin released the City’s revenue forecast, highlighting projected growth in crucial revenue sources — but also warning that government spending could eclipse revenue growth next year. The annual “Revenue Forecast Report,” online at lacontroller.org/revenue, provides updated estimates of current year General Fund and special fund revenues, and also projects how much money will come into the City’s coffers in the next fiscal year.

“Our local economy is still healthy and growing, and the good news is that it should continue through at least the next fiscal year,” said Controller Ron Galperin. “But we need to be cautious and careful. Expenses are catching up and we’re too often balancing the budget by tapping into the City’s reserves. Along with continued prudent budgeting, L.A. needs to make every effort to hone in on new sources of revenue.”

The revenue forecast features a range of estimates for future City revenue to help inform the Mayor and City Council as they discuss the City’s fiscal year 2019-20 budget this spring.

Galperin’s revenue forecast found:

  • General Fund revenue this fiscal year will end up 5.5 to 6.7 percent higher than last year.
  • While the General Fund should continue to expand in 2019-20, revenue growth likely will slow to less than three percent, while expenditures are estimated to increase by 4.4 percent.
  • This year, the City is projected to generate $40 million from cannabis-related licensing fees and business taxes, which could grow if the City intensifies its efforts to permit new cannabis businesses and enforce against illegal ones.
  • City leaders are drawing on reserves to balance the budget more often than not, even in good years. This practice could leave less money available when L.A. really needs it.
  • Special fund revenue continues to grow faster than General Fund revenue. The City should find more ways to use special funds on neighborhood needs in next year’s budget.
  • Because of Galperin’s 2014 audit and partnership with the City Council to update the Street Damage Restoration Fee, the City is projected to receive $40.2 million in revenue this year and $70.5 million next year  10 times the revenue L.A. recovered for the fee in 2018.

Follow L.A. Controller Ron Galperin at @LAController on Twitter, Facebook, LinkedIn and Instagram.