Page 456 - FY 2022-23 Proposed Budget

event cancellations and travel restrictions — will be largely absent in FY 23. Although it is
possible that anti-inflation actions by the Federal Reserve could influence revenues to some
degree, any economic slowdown would likely impact FY 24 revenues more than FY 23.

General Fund receipts for FY 23 are projected to be $7.09 billion, which is 6.1% less than the
current year estimates and 5.6% under the budgeted amount. This drop will be attributable to
the loss of one-time American Rescue Plan Act (ARPA) funds, which will all be received by the
City this year, FY 22. However, adjusting for this inevitability, General Fund revenue growth will
be approximately 3.9%.

Trouble ahead

Although the economy should continue to bounce back, the loss of ARPA funds spells trouble
for next fiscal year’s budget. This concern is compounded by the fact that the extraordinary
growth in transient occupancy, parking occupancy, sales and documentary transfer tax receipts
will likely stabilize in the coming fiscal year, while property and business tax growth will remain
moderate at around 4%.

Expenses are also on track to increase considerably next fiscal year. The hundreds of millions
of dollars in one-time ARPA funding used to create homelessness and equity programs will not
be available, leaving questions as to where the money will come from to continue them. And
nearly all City employees will receive a cost of living salary increase in July 2022 that was
deferred in the worst days of the pandemic. New collective bargaining agreements will be
negotiated next fiscal year as well.

Based on these factors, among others, I strongly urge the City to refrain from adding any
new, unaffordable expenditures in the coming budget as the money simply will not be
there to do so. Additionally, the City should not contemplate using Reserve Fund dollars to pay
for non-emergency expenditures. While Los Angeles justifiably tapped into these funds during
the pandemic, the City must now stay focused on maintaining its reserves so they remain ready
to assist in times of crisis.

Sincerely,

RON GALPERIN
L.A. Controller

cc: Sharon M. Tso, Chief Legislative Analyst
Matthew W. Szabo, City Administrative Officer

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