Los Angeles Mayor Eric Garcetti signed an $11.2 billion spending plan on Wednesday for the fiscal year that begins July 1. The next city budget includes nearly $1 billion to address the homelessness crisis in the city of L.A. — $164 million of which will be rolled over from the current fiscal year.
Between the pandemic and massive federal relief bills, it’s been a rollercoaster year for local government finances. It’s almost impossible to overstate the impact of the American Rescue Plan on city spending, officials say.
At one point in the current fiscal year, Los Angeles was facing a nearly $800 million deficit due to the pandemic slashing tax revenues. In the upcoming budget, the cash injection from Congress is enabling Garcetti and the city council to refill the city’s reserve funds and restore hundreds of jobs that were eliminated during the height of the COVID-19 crisis. Last month, the city received $640 million of the expected $1.2 billion in ARP funds. (The total stimulus headed for L.A. will be down $75 million from early estimates, but stronger-than-predicted revenue more than made up for the drop.)
Without the federal dollars, “I frankly shudder at the difficult decisions that would have been forced on us,” said Chief Legislative Analyst Sharon Tso.
In the past few weeks, the City Council added some changes to the mayor’s proposed spending road map, including funding a study to explore how to eliminate oil and gas extraction in the city of L.A., and and hiring for 750 positions using the Targeted Local Hire and Bridge to Jobs programs, which help people from disadvantaged communities find employment with the city.
The council also allocated roughly $100 million to the Department of Recreation and Parks budget — mostly to take care of deferred maintenance and to launch childcare programs at several city parks.
LAPD funding dipped slightly last summer in the wake of George Floyd protests, when the City Council cut $150 million from the police budget to reinvest in communities of color. The council voted last week to approve a plan for the remaining chunk of that money, more than $88 million, split between council districts based on census poverty data. Among the programs the money will be used for are: hiring gang intervention workers; funding youth programs; and creating universal basic income pilot programs in South L.A. and the San Fernando Valley. Using the post-cut total as a baseline, the mayor and the council approved adding about $41 million dollars in LAPD funding in the FY 2021-22 budget for a total of $1.76 billion.
Activists wanted to see more money cut from the department and reinvested in programs such as alternatives to incarceration and mental health treatment.
There’s still a ton of uncertainty in the air, caution city analysts, because the next budget includes lots of one-time spending. It’s unclear if the economic recovery will continue at its current rate, and as revenue flows change, the council will have to adjust spending accordingly.
The city also must follow federal guidelines for using American Rescue Plan money, including a timeline for when it has to be spent. Those rules were still in draft form as of last week.
