1. What is the size of the City's operating budget?
2. Where does the City's revenue come from?
3. What does the City spend its revenue on?
4. How much of the budget is discretionary?
5. How big is the City's workforce and how much of the budget is associated with employee salaries?
6. How does the City track revenue and expenditures throughout the year?
7. Does the City have a "rainy day" or reserve fund to help balance its budget?
8. What is the status of the City's negotiations with labor unions?
1. What is the size of the City's operating budget?
The City's FY2011-12 operating budget is $6.871 billion, consisting of a General Fund budget of $4.386 billion and special funds of $2.485 billion.
2. Where does the City's revenue come from?
The City collects revenue from over 20 different sources. Nearly two-thirds (64%) of the City's total revenue comes from General Fund sources including fees (restricted revenue), local property taxes, sales taxes, business taxes, and utility user taxes.
The remaining portion (36%) of total revenue comes from special fund revenues that must be spent for specific purposes such as taxes on gas and Federal State grants.
To view a more detailed list of City revenues, click here.
3. What does the City spend its revenue on?
As a full service city, the City of Los Angeles is responsible for providing police protection, fire services, parks, libraries, transit services, sidewalks, trash disposal, public works services, and a variety of other essential services at the level and quality expected and deserved by its residents.
To view a more detailed summary of appropriations, click here.
4. How much of the budget is discretionary?
Of the City's total FY2011-12 $6.871 billion budget, $3.217 billion (46 percent) comes from restricted revenue that is only used for specific purposes such as sanitation equipment, traffic congestion mitigation, sewer construction, storm water mitigation, and the City's contribution to rail transit. Some of the General Fund monies are also restricted for grant supported activities, fee-based services such as animal services, permitting and building inspections.
The remaining unrestricted funds (about $3.654 billion) are largely used to support some of the City's most core services such as crime suppression and fire prevention.
5. How big is the City's workforce and how much of the budget is associated with employee salaries?
The Adopted Budget includes 32,274 authorized positions, of which 13,677 are police (sworn and civilian) and 18,597 are all other positions. In total, direct salary costs make up approximately 85% of City departments' budgets.
To view current and past City staffing levels, please click here.
6. How does the City track revenues and expenditures throughout the year?
The City Administrative Officer (CAO) is responsible for tracking the budget and providing the City Council and Mayor with recommended adjustments in order to maintain a balanced budget throughout the fiscal year.
The CAO reviews City expenditures and revenue reports on a monthly basis in order to ensure spending and revenue stays in line with the adopted budget plan. About five times per year, the CAO provides the City Council and Mayor with a Financial Status Report that recommends revenue and expenditure adjustments and action for a balanced budget.
To view CAO financial status reports, click here.
7. Does the City have a "rainy day" or reserve fund to help balance its budget?
The City has a Reserve Fund where unrestricted cash is set aside outside the budget for unforeseen expenditures and emergencies. The funds can be transferred into the budget for such purposes as necessary. The FY2011-12 Budget includes a Reserve Fund balance of $193.4 million ($120.6 million in the Emergency Reserve Account and $72.8 million in the Contingency Reserve Account), which represents about 4.4% of the City's General Fund.
Two accounts are established within the Reserve Fund:
Emergency Reserve Account - in order to remove funds from this account, a finding by the Mayor, with the confirmation by the City Council, of "urgent economic necessity" must be made, as well as a determination that no other viable sources of funds are available. A finding of urgent economic necessity would be based on a significant economic downturn after the budget is completed, or an earthquake or other natural disaster.
Contingency Reserve Account - to be used for unanticipated expenditures or revenue shortfalls impacting programs already approved in conjunction with the current year budget. It is not to be used to fund new programs or positions added outside of the current year budget. Such funding must come from other sources.
The Reserve Fund balance can be a barometer of fiscal health and security. Rating agencies use this indicator in evaluating and rating the City's financial position for lending purposes. The Reserve Fund transfer to the General Fund for budget balancing is often cited as a measure of the imbalance between City revenues and expenses.
For the most recent update on the City's Reserve Fund, click here.
8. What is the status of the City's negotiations with labor unions?
In 2011, the City reached labor agreements with the majority of its employee bargaining units. For more information, please click here.
<< Return to Top of Page9. What is the City doing to reform its pension systems?
Rapidly increasing costs of retiree benefits and recent investment losses to the City’s retirement systems have jeopardized the City’s fiscal sustainability. To put the City on a more fiscally responsible path, the Mayor and City Council have taken steps to redesign the City’s pension systems for new employees.
On March 8, 2011, Los Angeles voters approved a pension reform ballot measure for new public safety employees. Changes to the pension plan include increased employee pension contributions, modified benefits, and a newly established employee contribution towards retiree healthcare costs. Assuming the City continues to hire public safety employees to maintain the current level of service, the City is estimated to save approximately $152 million over the next 10 years.
Additionally, the tentative agreement with the Coalition of LA City Unions will institute pension reform for current civilian employees by requiring that active employees begin to contribute 4% of pay to post employment medical benefits. The City is also exploring pension reform options for new civilian employees.