By JOSE HERRERA
A Los Angeles City Council committee advanced a series of recommendations Thursday to address an estimated $288.6 million budget deficit, including the potential elimination of 2,000 vacant city positions.
The five-member Budget, Finance and Innovation Committee voted 3-0 to support cost-saving measures to balance the budget after hearing City Administrative Officer Matthew Szabo discuss the Third (Mid-Year) Financial Status Report — which reviewed anticipated impacts to the 2024-25 fiscal year budget cycle as result of overspending, new labor contracts and revenues coming in below projections.
Council members Katy Yaroslavsky and Monica Rodriguez, who are members of the committee, were absent during the vote.
“What we are seeing are the impacts of a few years of very high inflation affecting consumer behavior,” Szabo said.
The committee approved plans to cover $168.67 million of the $288.6 million deficit, which include using $86.63 million from the city’s Reserve Fund. Szabo recognized the deficit, which could grow, will likely cause the Reserve Fund to drop below 5% in the 2024-25 fiscal year.
The Reserve Fund is the account used to defend the city against unbudgeted or unforeseen events that may impact the city’s fiscal solvency. The city’s reserve balance stands at $482 million, or 6.2% of the 2023-24 General Fund revenue, according to the financial report. The city has a policy to keep the reserve fund at or above a 5% minimum.
City officials will look to identify another $31.83 million to further reduce the deficit by the end of the 2023-24 fiscal year, with the aim of bringing it down to $88.06 million.
Szabo said the city’s Prioritized Critical Hiring Process would address the $88.06 million in the next budget cycle.
City officials approved a hiring strategy in January to potentially eliminate up to 2,000 positions of “non-critical” city positions that are currently vacant. Officials say the move could save the…
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