Page 6 - FY 2021-22 Supporting Information
P. 6

The  Outlook  makes  several  assumptions  that,  if  not  met,  would  change  future  year
               projections. The Outlook assumes that the pandemic conditions will lessen by the end of July 2021,
               and the economy will begin to strengthen at that time. If this does not occur, revenue growth could
               fall short of projections and there could be unanticipated COVID-19 response spending.

                       Finally, the Outlook assumes that revenues will continue to grow consistent with historical
               averages  and that expenditures  will  remain consistent, with growth dedicated to maintaining
               current service levels. It assumes no further employee compensation adjustments following the
               expiration of the current employee agreements over the next couple of years. There has yet to be
               a final decision on costs associated with pursuing the Civic Center Master Plan, the Los Angeles
               Convention Center Expansion Project, or the Los Angeles River Revitalization Master Plan.  As
               such, the Outlook does not include the costs of these major construction projects whether as debt
               service payments or availability payments.

               Areas of Concern

                       It is customary for my Office to identify the areas of concern with the Proposed Budget that
               we believe may require attention and/or solutions during the course of 2021-22. The single greatest
               risk to the Budget is whether the U.S. Department of Treasury’s guidance related to the use of the
               American Rescue Plan funds enables the City to use those funds as envisioned. The Budget
               assumes wide discretion for the use of these funds, including as revenue replacement to sustain
               general government purposes. If the guidance does not support this approach, the City will have
               to significantly revise the Proposed Budget.  Also, as noted, the future of the pandemic itself
               presents a major challenge.

                       I look forward to discussing these issues and any others that may arise as you work to
               adopt a fiscally responsible, balanced budget for 2021-22.

                                                                  Sincerely,





                                                                  Richard H. Llewellyn, Jr.
                                                                  City Administrative Officer
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