Page 40 - 2020-21 Supporting Information Book_Revised

2020-21 PROPOSED BUDGET
(22) Elections: Pursuant to Charter Amendment 1, the County administers City Elections and the City reimburses
the County for its share of the costs. The City continues to perform limited functions related to the elections. The
FOUR-YEAR GENERAL FUND BUDGET OUTLOOK (OUTLOOK) FOOTNOTES
Outlook includes the costs for both the City’s work on the elections and the estimated reimbursement to the
County. The 2020-21 amount represents funding set aside in the UB for a November 2020 general election. The
REVENUE:
(22) Elections: Pursuant to Charter Amendment 1, the County administers City Elections and the City reimburses
amounts estimated in 2021-22, 2022-23, 2023-24, and 2024-25 include the estimated cost for a March 2022
the County for its share of the costs. The City continues to perform limited functions related to the elections. The
primary election, November 2022 general election, March 2024 primary election, and November 2024 general
(1) General Fund (GF) Base: The revenue base for each year represents the prior year’s estimated revenues.
Outlook includes the costs for both the City’s work on the elections and the estimated reimbursement to the
election, respectively.
County. The 2020-21 amount represents funding set aside in the UB for a November 2020 general election. The
(2) Revenue Growth: Revenue projections reflect the consensus of economists that the first quarter in 2020 will
amounts estimated in 2021-22, 2022-23, 2023-24, and 2024-25 include the estimated cost for a March 2022
(23) Capital Improvement Expenditure Program (CIEP) – Municipal Facilities and Physical Plant: The 2020-21
mark the start of a recession, however, there is no consensus on its severity or length. Citing the relative good
primary election, November 2022 general election, March 2024 primary election, and November 2024 general
Proposed Budget includes a reduction in funding from the General Fund of $3.2 million for physical plant related
health of the pre-pandemic economy, higher state and local government reserves, and current stimulus efforts,
election, respectively.
capital projects and $13.3 million for municipal facilities. In 2020-21, one-time reductions taken in the Budget are
the Outlook assumes recovery in 2021. The current Safer at Home order is projected to end in May and the
increased to reflect funding for capital and infrastructure improvements at one percent of General Fund revenue.
estimated receipts for 2020-21 and revenue growth for outgoing years reflect this assumption. The assumptions
(23) Capital Improvement Expenditure Program (CIEP) – Municipal Facilities and Physical Plant: The 2020-21
for economy sensitive revenues are also based on a single nonessential business closure event and no future
Proposed Budget includes a reduction in funding from the General Fund of $3.2 million for physical plant related
(24) CIEP – Sidewalk: Pursuant to the settlement in the case of Willits v. City of Los Angeles, the City is
Safer at Home orders. The amounts represent projected incremental change to the base. Any one-time receipts
capital projects and $13.3 million for municipal facilities. In 2020-21, one-time reductions taken in the Budget are
responsible for investing $31 million annually for sidewalk improvements for the next 30 years, with adjustments
are deducted from the estimated revenue growth for the following fiscal year.
increased to reflect funding for capital and infrastructure improvements at one percent of General Fund revenue.
of 15.3 percent every five years to account for inflation and material price increases. The 2020-21 decrease of
$0.9 million in General Fund appropriations reflects the availability of special funds to meet the required $31 million
The total projected revenue reflects above average growth in 2020-21 attributed to one-time receipts of delayed
(24) CIEP – Sidewalk: Pursuant to the settlement in the case of Willits v. City of Los Angeles, the City is
obligation. The 2020-21 increase of $2.4 million reflects the assumption that the General Fund portion will be
2019-20 payments and deferred tax collection efforts as well as a third quarter economic rebound. Outgoing years
responsible for investing $31 million annually for sidewalk improvements for the next 30 years, with adjustments
increased to $19.3 million annually, with the balance of the investment covered by other sources of funds. The
include average growth.
of 15.3 percent every five years to account for inflation and material price increases. The 2020-21 decrease of
General Fund appropriation will increase by $5.7 million in 2022-23 to reflect both the required adjustment and to
$0.9 million in General Fund appropriations reflects the availability of special funds to meet the required $31 million
recognize that proprietary departments’ expenditures are expected to decrease as sidewalk repairs are completed
obligation. The 2020-21 increase of $2.4 million reflects the assumption that the General Fund portion will be
(3) Property tax growth is projected at 6.6 percent for 2020-21 with historic growth for ensuing fiscal years.
at their facilities.
Documentary Transfer is a volatile revenue in particular when sales volume and price move together. The current
increased to $19.3 million annually, with the balance of the investment covered by other sources of funds. The
year estimate assumes that pricing and sales volume hold steady, as the predicted recession is not being driven
General Fund appropriation will increase by $5.7 million in 2022-23 to reflect both the required adjustment and to
(25) CIEP – Pavement Preservation Program: Total Pavement Preservation Program funding is reduced to $141.4
by the housing market. Should pandemic-related layoffs result in permanent job loss, there is downside risk to this
recognize that proprietary departments’ expenditures are expected to decrease as sidewalk repairs are completed
million in 2020-21 to reflect one-time efficiencies from various sources of funds. Funding in 2020-21 is included in
at their facilities.as well. The Outlook includes steady growth in outgoing years as home prices are restrained by
revenue source
departments’ budgets. It is assumed that one-time reductions will be restored in 2021-22 and the program will
affordability. The Residential Development Tax is another volatile revenue which is being impacted by COVID-19
continue at that level through 2024-25. To meet this level in 2021-22, an additional $27.8 million in General Fund
and the slowing of construction activity for new dwelling units. A significant rebound is expected in 2021-22 with
(25) CIEP – Pavement Preservation Program: Total Pavement Preservation Program funding is reduced to $141.4
will be required. This cost will increase by approximately $3 million annually in subsequent years.
a return to gradual growth thereafter.
million in 2020-21 to reflect one-time efficiencies from various sources of funds. Funding in 2020-21 is included in
departments’ budgets. It is assumed that one-time reductions will be restored in 2021-22 and the program will
(26) Appropriation to the Reserve Fund: In certain years, a General Fund appropriation to the Reserve Fund has
(4) Business tax revenue assumes the recovery of delayed 2019-20 receipts totaling $44.7 million in 2020-21.
continue at that level through 2024-25. To meet this level in 2021-22, an additional $27.8 million in General Fund
been budgeted to strengthen the status of the Reserve Fund. The appropriation to the Reserve Fund in 2020-21
Based on declines for previous recessions a 7 percent decrease is assumed for non-cannabis r
will be required. This cost will increase by approximately $3 million annually in subsequent years.enewal activity.
is $12.3 million, which is $4.7 million more than the 2019-20 appropriation. No appropriation is included in
Cannabis-related business activity assumes that current-year growth continues at 25 percent with no impact from
subsequent years.
the pandemic or recession. Total business tax growth for 2021-22 assumes recovery in non-cannabis business
(26) Appropriation to the Reserve Fund: In certain years, a General Fund appropriation to the Reserve Fund has
activity.
been budgeted to strengthen the status of the Reserve Fund. The appropriation to the Reserve Fund in 2020-21
(27) Appropriation to the Budget Stabilization Fund (BSF): In January 2020, the Mayor and City Council adopted
is $12.3 million, which is $4.7 million more than the 2019-20 appropriation. No appropriation is included in
a revised policy for this fund. Pursuant to the policy, when the combined annual growth for seven General Fund
Sales tax growth is based on available economic forecasts and assumes a 5 percent decline for 2020-21 followed
subsequent years.
tax revenue sources exceeds the Average Annual Ongoing Growth Threshold, the budget must include a deposit
by 3.8 percent average growth in the outgoing years. Subsequent to the formulation of this estimate, the State
into the BSF. For every one half percent that revenues exceed the Average Annual Ongoing Growth Threshold,
extended the due date for the payment of quarterly sales tax owed by businesses. The reduction to City receipts
(27) Appropriation to the Budget Stabilization Fund (BSF): In January 2020, the Mayor and City Council adopted
five percent of the value of that excess revenue must be deposited to the BSF, not to exceed 25 percent of the
will be first realized before the close of 2019-20 and the impact from extended payment periods would continue
a revised policy for this fund. Pursuant to the policy, when the combined annual growth for seven General Fund
excess growth. When growth of these receipts falls short of the Average Annual Ongoing Growth Threshold, the
until 2021-22.
tax revenue sources exceeds the Average Annual Ongoing Growth Threshold, the budget must include a deposit
Budget may include a withdrawal from the fund in the amount of five percent of the value of the lost revenue for
into the BSF. For every one half percent that revenues exceed the Average Annual Ongoing Growth Threshold,
each one percent of growth below the Growth Threshold. Based on the Average Annual Ongoing Threshold of
(5) Electricity Users tax reflects an economic driven decline in 2020-21 consistent with estimates provided by the
five percent of the value of that excess revenue must be deposited to the BSF, not to exceed 25 percent of the
4.3 percent, the appropriation to the BSF is $6.2 million in 2021-22.
Department of Water and Power, reflecting current assumptions on rates and electricity consumption and adjusted
excess growth. When growth of these receipts falls short of the Average Annual Ongoing Growth Threshold, the
to reflect uncollectable receipts which are expected to significantly increase as a result of the financial hardships
Budget may include a withdrawal from the fund in the amount of five percent of the value of the lost revenue for
(28) Net – Other Additions and Deletions: The 2020-21 amount includes one-time reductions and efficiencies and
brought on by COVID-19. After a recovery in 2021-22, the outgoing years of revenue are consistent with historical
each one percent of growth below the Growth Threshold. Based on the Average Annual Ongoing Threshold of
ongoing changes and new regular positions added to the base budget. The significant reductions include one-time
growth.
4.3 percent, the appropriation to the BSF is $6.2 million in 2021-22.
salary reductions based on a civilian hiring freeze and furlough program throughout 2020-21. Among the
significant increases are appropriations of $8 million to Recreation and Parks and $13 million to the Library. The
The 2020-21 reduction in Gas Users tax revenue and no growth outlook is based on the full implementation of a
(28) Net – Other Additions and Deletions: The 2020-21 amount includes one-time reductions and efficiencies and
remaining balance reflects new and increased ongoing costs to a variety of departmental programs. Subsequent
taxpayer settlement agreement that reduces the tax base.
ongoing changes and new regular positions added to the base budget. The significant reductions include one-time
years include projected expenditures for the restoration of one-time expenditure reductions, structured payments,
salary reductions based on a civilian hiring freeze and furlough program throughout 2020-21. Among the
hotel development incentive agreements, the Body Worn Video Camera Program, LAPD vehicles, and the
The decline in Communications Users tax revenue continues due to aggressive wireless plan pricing and the
significant increases are appropriations of $8 million to Recreation and Parks and $13 million to the Library. The
recycling incentives program.
decrease in landline use. Average declines of 7.9 percent are anticipated as part of the Outlook.
remaining balance reflects new and increased ongoing costs to a variety of departmental programs. Subsequent
years include projected expenditures for the restoration of one-time expenditure reductions, structured payments,
(29) Total Budget Gap: The Total Budget Gap reflects the projected surplus (deficit) in each fiscal year included
hotel development incentive agreements, the Body Worn Video Camera Program, LAPD vehicles, and the
in the Outlook.
recycling incentives program.
(29) Total Budget Gap: The Total Budget Gap reflects the projected surplus (deficit) in each fiscal year included
in the Outlook.
21
24
24