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City's Budget Deficit is More than City's Reserve Funds
The insurmountable budget shortfall for the city of Los Angeles received another reality check today. City Controller Wendy Greuel today released her Bugedtary Cash Flow report one month early. "Traditionally, I report to you on March 1st of the year but the situation we are facing is so dire, I am compelled to update you now so that urgent action can be taken immediately," she wrote.
The problem? Despite all efforts to save money, the city faces a $199 million deficit by the end of the current fiscal year on June 30th. While the reserve, currently at $189, could nearly balance the budget, Greuel warns against it. "To deplete the majoirty of the Reserve Fund this year would leave the City with no margin for error and a total inability to respond to further revenue shortfalls," she wrote. "The City's own policy targets maintaining a 5% balance in the Reserve Fund which would equal approximately $220 million." Among other things, an underfunded reserve jeopardizes the city's ability to retain loans.