Page 459 - FY 2022-23 Proposed Budget

Debt

The estimated debt service requirement for 2022-23 on the City’s long-term
debt is $551.2 million, which is $21.4 million less than 2021-22 due to
refunding of certain MICLA and General Obligation Bonds. A total of $114.7
million of this sum is for principal and interest payments on the City’s $739
million in outstanding General Obligation Bonds (GOB). The remaining debt
service covers the Municipal Improvement Corporation of Los Angeles
(MICLA), the Wastewater and Solid Waste Resources Programs, and Site-
Specific Tax Revenue Debt.

In total, debt service is projected to be 4.17 percent of projected 2022-23
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
the City’s short-term cash flow requirements in the first half of the following
fiscal year. Based on revenue and expenditure patterns, the likely cash flow
borrowing requirement in 2022-23 is between $450 and $550 million.

In addition to the TRAN, the Controller is authorized to enter into short-term
borrowing from the Reserve Fund when cash flow is required. 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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