Page 462 - 2020-21 Budget Summary

Revenue Forecast Report
Summary

Debt

The estimated City debt service requirement, excluding the Tax and Revenue
Anticipation Notes (the TRAN), is $587 million for 2020-21, which is $39
million less than required in the current year. A total of $129 million of this
amount is for principal and interest payments on the City’s $901 million in
outstanding General Obligation Bonds (GOBs). The remaining debt service
covers the Municipal Improvement Corporation of Los Angeles (MICLA);
Wastewater, Solid Waste Resources, Site-Specific Tax Districts, and Judgment
Obligation Bonds.

In total, debt service is projected to be 4.96 percent of projected 2020-21
General Fund receipts, well under the 15 percent limit set by the City’s Debt
Policy.

General Fund Cash Flow

Annually, the Controller estimates an amount of borrowing needed to meet
City short-term cash flow requirements in the first half of the next fiscal year.
Based on revenue and expenditure patterns, the likely cash flow borrowing
required in 2020-21 is between $450 million and $500 million.

In addition to the TRAN, the Controller is authorized to enter into short-term
borrowing from the Reserve Fund when cash flow is needed. However, this
can cause concern when the Reserve Fund balance is close to the five percent
target set by the City’s financial policies. In order to balance this concern
against cash flow needs and legal caps on the TRAN, the Controller will work
closely with the City Administrative Officer to determine the most appropriate
amount to borrow, and to explore alternatives to the TRAN, including internal
sources of funds.

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