L.A. Controller’s Financial Report Urges City to Live Within Its Means
LOS ANGELES – City Controller Ron Galperin today released a report summarizing the City’s balance sheet and spending for the fiscal year ended June 30, 2018. The Preliminary Financial Report highlights record revenues – which grew by 3.4% over the prior year in the General Fund to $5.8 billion, and 4.1% in budgeted special funds. Overall, revenues were up 3.9%.
Total expenditures, however, also grew by 3.6% over the same period – largely attributable to salaries and benefits, which accounted for almost 75% of that increase. This marks the third straight year City expenditures exceed revenues. The spending over revenues was made possible, in part, by the fact that the City Reserve Fund dipped from 6.1% to 5.6% of the General Fund budget.
On the positive side of the ledger, the City realized all-time high receipts from Property Tax, Business Tax, Sales Tax, and Transient Occupancy Tax. Liability payouts – while totaling $108 million – were down by 46% from the prior year. A flattening of revenue increases may be in the offing, however, Controller Galperin said. As an example, Documentary Transfer Tax receipts, which are realized based on the volume and price of real estate sales, declined for the first time since 2009. If growth of the national or local economy slows even modestly, said Galperin, revenues will inevitably be impacted.
“It’s time for the City to do some belt-tightening”, L.A. Controller Ron Galperin said. “The fundamentals of our City revenues remain strong, but we should be prepared if revenue growth begins to slow. The best way to do that is to be careful about new spending – and for the City to sock away some more reserves and live within its means.”
Each year, the Controller’s office submits a Preliminary Report to the Mayor and City Council providing a snapshot of the recently concluded fiscal year. LAController.org now features an interactive tool to explore revenues, expenditures, assets and liabilities. The City’s Comprehensive Annual Financial Report for the 2018 fiscal year will be issued in January 2019.