Page 508 - FY 2022-23 Proposed Budget

GLOSSARY

Municipal Improvement Corporation of Los Angeles (MICLA): A non-profit corporation established by the City of
Los Angeles in 1984 to serve as the lessor in lease-purchase transactions involving the City. MICLA was
organized for social welfare purposes within the meaning of Section 501(c)(4) of the Internal Revenue Code.
MICLA plays no active role in either the procurement of funds or equipment, but must review and approve the
projects proposed by the City for financing through MICLA.

Obligatory Changes: Changes to a program that are required to maintain the current level of effort, including legally
mandated changes.

Program: A group of related budgetary activities performed by a department to accomplish a function for which the
City is responsible.

Property Tax (Ad Valorem): There are two distinct types of property tax levies authorized by State legislation, as
follows: One Percent and General Obligation Bond Debt Service. The County administers the levies as assessor
and tax collector.

Property Tax - One Percent: The tax based on one percent of the assessed market value of properties, except for
certain adjustments. The City is entitled to its pro rata share of the County collection under a formula dating from
1978, following the major change to the tax structure under Proposition 13.

Proposed Budget: The budget document that includes a line item listing by account of funding levels provided for
each department.

Proposition 13: The State proposition that limited the amount of ad valorem taxes on real property to one percent
of full cash value as determined by the County Assessor. The percent of the tax is only adjusted by additional ad
valorem on bonded indebtedness for acquisition or improvement of real property approved on or after July 1,
1978 by two-thirds of the voters on such indebtedness.

Regular Position Authority: A position funded in the budget and approved for filling by ordinance. The need for this
position is permanent.

Related Cost: A cost necessary for the functioning of a City department as a whole that is budgeted outside that
department. Such costs include, but are not limited to, pensions, health insurance, utilities, pool vehicles, and
custodial services.

Reserve Fund: The fund in which general unrestricted cash is set aside outside the budget for unforeseen
expenditures and emergencies. The City can transfer these funds into the budget for such purposes. Unallocated
general revenue and unencumbered General Fund appropriations to departments at the close of the fiscal year
are transferred into this fund. The Reserve Fund is comprised of two accounts - a Contingency Reserve Account
and an Emergency Reserve Account. The Contingency Reserve Account is available to cover unexpected
expenditures and/or General Fund revenue shortfalls upon authorization by the City Council and Mayor. The
Emergency Reserve Account, which is set at a minimum of 2.75 percent of the General Fund revenues, may not
be used for funding unless the City Council and Mayor determine that there is an urgent economic necessity and
conclude that no other viable sources of funds are available.

Resolution Position Authority: A position funded in the budget and approved for filling by a Council resolution. The
need for the position is expected to be temporary.

Revenue: Cash or credits the City receives during the fiscal year as income to finance general or restricted
operations. They include items such as taxes, fees from specific services, interest earnings, and grants from the
state or federal governments.

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