The Budget: How it Works, Why it Matters, and What’s Next

Every year, the City of Los Angeles goes through an intricate process to propose, amend, and finalize its Annual Budget.

The budget is a sprawling document, covering every single one of our city’s massive range of public services, from the Department of Aging to the Zoo. It’s also a summary of LA’s priorities — especially important as we navigate our way out of the pandemic-induced financial crisis.

Here’s how the process plays out every year:

Step 1: City departments make budget requests to the Mayor’s office.

Step 2: A draft budget is proposed by the Mayor.

Step 3: The City Council’s five-member Budget and Finance Committee holds hearings on the budget with every city department, and makes recommendations for changes to the budget.

Step 4: The budget goes before the full City Council, where all the councilmembers can put forward motions to make changes.

Step 5: The final budget is voted on by the City Council.

Last month, the Mayor proposed a budget of $11.765 billion, the largest in the city’s history.

Right now, we’re in Stage 3 of the budget process outlined above. The Budget and Finance Committee is holding hearings, and committee members are suggesting changes to go before the full Council in a couple of weeks.

My staff and I have looked over the Mayor’s budget, and we’ve sent a letter to the Budget and Finance Committee with a number of recommendations. I’ll summarize those at the end of this post.

But first, I want to talk about some of the financial issues we’re facing in this city — some that are recent developments, and others that go back many years.

Over the last two decades in Los Angeles, in response to past fiscal crises, our municipal services and personnel have been hollowed out in ways that have made the city less habitable, less well-maintained, less affordable, and less safe. We have work to do to replenish those services — and that work should be reflected in this year’s budget.

Here are some important things to keep in mind as we move through the budget process:

CITY SERVICES HAVE NEVER RECOVERED FROM THE 2008 FINANCIAL CRISIS

When the world economy nosedived in 2008, Los Angeles experienced serious financial turmoil. Tax revenues plummeted, and by 2010 the City faced a budget shortfall of almost half a billion dollars.

City leaders responded by cutting jobs. Over the next few years, more than five thousand City positions were eliminated — almost 15% of the entire City workforce from before the crisis. Only LAPD officer staffing was maintained at the same levels, though the department did make cuts to overtime payouts and civilian staffing.

We’re now more than a decade removed from the 2008 crisis — but only a fraction of the jobs that were cut have been restored.

• Total employees 2007–2008: 37,173
• Total employees 2012–2013: 31,817
• Total employees 2022–2023 (proposed): 34,392

This means that as the City’s needs have grown over the last fifteen years, the number of employees at our disposal to meet those needs has shrunk overall.

The gap in our staffing has led to declines in a number of City services. Tree trimming and other basic forms of public maintenance don’t happen as often. City-operated venues like Griffith Observatory are only open a few days a week. Our Information Technology Agency, which helps every other department function effectively, is almost half as large as it was pre-2008.

And while frontline firefighters and police lost the fewest staff, our other staff cuts have damaged our ability to ensure residents are safe and healthy in other ways.

Some of these staffing cuts can lead to dangerous situations. After building inspectors were cut at the Fire Department, the City fell years behind on vital inspections — leading to a scramble to catch up, concerns about the rushed process from within the department, and multiple legal settlements from firefighters who claimed they were retaliated against for reporting misconduct in the Fire Prevention Bureau. When a building downtown exploded in 2020, injuring 11 firefighters, the department’s records showed that it had never been inspected in the 21 years since it had been built.

LA has done a much better job of recovering from the recent pandemic-induced financial crisis than we did coming back from the previous one — mostly because of aid from the federal and state government to fill holes in the budget. But we’re still down almost 3,000 City positions from before the 2008 crisis. Replenishing our human resources, with the goal of making priority services work better, should be one of the primary goals of this budget process.

EVERY DEPARTMENT IS FACING HIRING ISSUES

Like a lot of industries across the country right now, Los Angeles is having trouble filling available City jobs. A wave of retirements and increased job competition has led to an unprecedented number of vacancies — compounding our existing issues with maintaining City services. This means that authorized staffing positions do not always reflect actual staff in the departments.

As traffic deaths hit their highest total since 2003, the Department of Transportation is experiencing high vacancy rates for traffic officers. Earlier this year, staffing shortages at Sanitation led to trash not being picked up. Our city’s contractors are also facing hiring challenges. Our network of homeless service providers is one of the hardest-hit areas for staffing issues — jobs take months to fill, and public agencies and non-profit service providers are frequently poaching employees from each other.

Even departments with the most generous employee pay packages are having trouble meeting their authorized staffing numbers. LAPD is authorized to hire 9,706 officers in the current fiscal year, but the department was unable to hire up to that number and as of this month maintains a force of 9,371.

Across all departments, being short-staffed leads to costly overtime budgets. And because of both staffing shortages and reduced staff overall, overtime has become the norm for how we fulfill some of our basic services.

An important note about overtime: in some situations, the City budget doesn’t dictate how much overtime some employees are allowed to work. The budget only dictates how much overtime will be *paid out this year.* If more overtime is required, such as during a major fire or other crisis, delayed overtime that is required can be “banked” and able to be cashed out down the road — ultimately at a higher cost to the City than when those hours were first worked.

Even in a good year, LA hasn’t been speedy at bringing on new employees. It takes months to complete a hiring process from start to finish — and that timeline has been getting longer in recent years.

To me, our staffing issues add to the urgency to meaningfully fund new positions for priority services in the City — these jobs often take a long time to fill, and it’s actually costly to leave them open.

LOS ANGELES’S FINANCIAL FUTURE IS UNCERTAIN

In March, City Controller Ron Galperin released his office’s annual revenue forecast report, finding that while revenue is increasing, the City faces real challenges in its financial future.

Most of these challenges, according to the report, are driven by the fact that one-time pandemic relief funding granted from the federal government will expire this year — leading to the possible expiration of vital programs if LA’s economic picture doesn’t significantly improve.

Unfortunately, our City’s finances were problematic even before the pandemic.

In 2019, the City Council agreed to a number of raises for City employees, with the bulk of the salary increases going to the Police Department. Despite the fact that the City was projecting above-average revenue growth, these raises put LA hundreds of millions of dollars in the red.

Due to significant declines in City revenues during the pandemic, employee unions were asked to delay the 2019 raises until LA’s finances improved. But those debts are coming due now — almost the entire increase to the LAPD budget in this year’s City budget is due to these pre-negotiated increases to salary and cash overtime payments.

Salary increases like these have been the primary driver of new City spending for years, especially at the Police Department. Since the 2007–2008 fiscal year, LAPD’s total budget has increased by $1.2 billion — a growth of 61% — even though the number of officers on the force is approximately the same. Almost all of the growth has come from increases to salaries and pensions.

The salary increases in this year’s budget are legally obligated, so there isn’t much that can be changed about them. But we can begin making investments in projects that will help us provide important City services more cost-effectively.

OUR RECOMMENDATIONS

My office has made suggestions for amending this year’s proposed budget with all of the above factors in mind.

We’re pushing for changes that will replenish some of the vital services we’ve lost in recent years, and put major resources toward some of the City’s stated priorities of this moment: affordable housing, combating homelessness, climate-friendly transportation, and new approaches to public safety.

We’ve targeted resources and personnel toward departments that are tasked with addressing LA’s most urgent goals: making all residents secure in their homes and safer and healthier on our streets.

You can read our full letter to the Budget and Finance Committee here. Below is a summary of what we’re asking for:

Provide Staff and Support to Expedite Affordable Housing Initiatives

We all recognize the severity of LA’s housing crisis: we’re one of the most rent-burdened cities in the world and face a deficit of half a million affordable units. Unfortunately, new development takes a lot of time in Los Angeles, and affordable projects can often face huge disadvantages against market-rate and luxury buildings — slowing down production of the units we need the most.

Last year, our office put forward a motion asking the Planning Department to outline what steps they would need to take to streamline affordable development. They just came back with a comprehensive report — laying out a list of City jobs that, if created, could conceivably cut the timeline for affordable development *in half*.

We’re strongly recommending that these positions be funded in this year’s budget. We have no time to waste in tackling the housing crisis that has destabilized our neighborhoods and driven so many Angelenos out of their homes — often onto the street.

Fund and Streamline Street Safety and Active Transportation Projects

LA’s streets are less safe than they’ve been in almost two decades — but in this budget, the Department of Transportation isn’t seeing meaningful increases to its street safety and active transportation investments, and some programs are actually being cut.

We’re asking for about twenty street safety positions recently deleted from the LADOT budget to be restored, in addition to funding for:

• New positions dedicated to designing and implementing Active Transportation projects around the City
• Continuation of LADOT’s Universal Basic Mobility program
• A new Chief Technology Officer for the department

Expand Unarmed Response and Mental Health Services

After tens of thousands of people marched against police brutality in LA’s streets during the summer of 2020, City leaders responded in a couple of ways.

• The Mayor and City Council made a temporary 3% cut to the LAPD budget, with those funds reallocated to low-income neighborhood programs and restored to the budget the following year.
• Councilmembers put forward and passed two motions exploring alternatives to armed law enforcement.
• One of the motions was to divert non-violent emergency response away from armed police and toward a new type of first responder.
• The other motion was to place traffic enforcement under the authority of unarmed traffic officers instead of police.

Both of the proposed motions presented bold changes — the implementation of either one would respond to concerns about unsafe police encounters, create more cost-efficient alternatives, and allow armed law enforcement officers to prioritize response to violent crime.

But two years later, both have yet to be implemented — and while some non-emergency response programs have been piloted, the budget for LAPD has far outpaced new funding for alternatives.

This year, a Requests for Proposals (RFP) went out for contractors to operate the alternative emergency response pilot, and the Department of Transportation is currently working with a consultant to develop recommendations for using unarmed, civilian personnel for traffic safety enforcement. We’re asking funding to be set aside for both programs in this budget, so this process isn’t delayed any longer. For CD4’s Valley neighborhoods, we’re also requesting a Multi-Disciplinary Team — an outreach unit specializing in substance use and mental health issues — that can add to the alternative response resources we’ve already brought forward in our district.

Expand CD4’s Encampment Receptacle Pilot Citywide

As we grow our supply of shelter facilities, supportive housing, and other resources to get people off the street, we need to put in consistent effort to keep public spaces clean and safe while people work to get indoors.

Last year, our office passed a motion to work with the Department of Sanitation in our district to place new, larger, sturdier trash bins at encampments across the district and conduct more frequent pickups. Sanitation has looked at the data, and it was a big success — the receptacles were widely utilized and streets got cleaner and more accessible for all. We’re recommending a citywide expansion of the pilot to be funded in this year’s budget.

Center Racial Equity and Environmental Justice in Planning Processes

LA has a couple of major planning events in its near future — we recently updated our Housing Element and are actively updating elements to our new General Plan, including a number of community plans in the next few years. All of these will dictate so much of where and how Angelenos live in this city.

The Department of City Planning has set admirable priorities for these processes: racial equity and environmental justice highest among them. But in order to live up to our ambitions, we’ll need to supply Planning with new team members dedicated to overseeing these issues. Our budget letter includes a request to do just that.

HOW CAN YOU GET INVOLVED?

I hope this post has been helpful in outlining how LA’s budget works and some of the financial issues we’re facing — because it’s important that Angelenos are tuned in. Though it may seem like an obscure, backroom affair, LA’s budget can and should be responsive to the demands of the people who live and work here.

The City Council votes on the final product, and Councilmembers are the ones who suggest changes all the way to the end. If you have priorities for the budget, let your Councilmember know (especially if it’s me!). The more specific your suggestion, the better.

As the process plays out, I’ll be giving some more budget updates on my office’s social media accounts (@cd4losangeles on Twitter and Instagram). If you have questions, you can also always email us at contactCD4@lacity.org.