Mayor's Proposed Budget 2011-12-1

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Overview of Proposed 2011-12 Budget

Mayor Antonio R. Villaraigosa

April 20, 2011



Human Resources Benefits Expenditures

FY05-06 to FY11-12

$280.7$308.5

$338.0 $339.9$374.2

$390.0 $393.0

$131.0

$120.6

$128.5$131.2 $127.7

$155.7 $162.4

$0.0

$200.0

$400.0

$600.0

$800.0

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12*

I n M i l l i o

n s

Health Care and FLEX Worker's Comp

Total $401.3 $439.7 $466.5 $467.6 $505.3 $545.7 $555.4 $1

*Proposed BudgetHealth Care and Flex includes Unemployment Insurance contributions and Employee Assistance Contributions



Historical General Fund City Contributions

to Pension Systems**

$581.9$520.6513.5

$549.9$502.7

$371.8

$220.2

$190.1183.3$187.1

$170.3

$107.5

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

I n M i l l i o n s

Pension Health

**LAFPP and LACERSSource: CAO, 8/3/10 and 10/22/10 Council Presentation

Total Contribution $479.3 $673.0 $737.0 $696.8 $710.7 $802.1 $322

% of GF 12.14% 15.51% 16.61% 15.30% 16.16% 17.58%



Summary of General Fund Spending

2010-11 General Fund Appropriations $4,375,214,167

Less Departmental Receipts $333,351,420

Less Trans and Pension Payments $742,900,328

Less Benefit Payments (HRB – Active employee benefits & WC) $559,131,165

Less Debt Payments (CAP Finance) $210,507,740

Less Liability Claims $48,520,000

Less Judgment Obligation Bonds $10,761,715

Less Water and Electricity $50,428,994

Less Mandatory Library and RAP Appropriations $220,863,004

Less "Non-discretionary" Special Fund, GCP, and UB $105,915,741

Subtotal $2,092,834,060



Subtotal $2,092,834,060

Less Police $1,094,397,299Less Fire $350,842,367

Remaining GF $647,594,394

Remaining GF Operating Departments $566,577,144 Aging Disability Personnel

Animal Services Emergency Management Planning

Building and Safety Employee Relations Brd PW-BoardCAO Finance PW-Con Ad

City Attorney Ethics Dept PW-Engineering

City Clerk GSD PW-Street Services

City Controller ITA Transportation

City Council Mayor Treasurer

Cultural Affairs DONE

Other UB, GCP and Other Special Fund Accounts $74,670,750

GF Capital Improvement Accounts $6,346,500



FY2011-12 General Fund Revenue Sources

2010-11 2011-12

Property Tax $1,408,529 $1,436,363

Licenses, Permits, Fees & Fines 778,177 721,272

Utility Users' Tax 654,600 627,832Business Tax 411,960 439,219

Sales Tax 289,412 306,239

Power Revenue Transfer 257,000 254,000

Parking Fines 142,446 141,000

Transient Occupancy Tax 122,700 136,200

Documentary Transfer Tax 105,000 105,000

Parking Users' Tax 85,983 88,200Remaining Revenue Sources 119,408 123,675

Total General Fund Receipts $4,375,215 $4,379,000

In Thousands

The economy is showing signs of recovery from the recent recession.Estimated revenue growth is projected to be slightly ahead of the FY2010-11

Adopted Budget.



Revised CAO Estimated

FY11-12 General Fund Deficit

2.5

3

3.5

4

4.5

Estimated GeneralFund Spending

Estimated GeneralFund Revenue

Pension

Benefits

$152M,

46%

Health

Benefits,

$24M, 7%Capital

Program$38M , 11%

Employee

COLAS

$122M,

36%

Estimated GF Deficit:$336.3 million

$ B i l l i o

n



Final General Fund Deficit to Solve

($336.3)

($80.0)

($41.2)

Revised CAO Estimated

FY11-12 General Fund Deficit

Remove Assumption that Negotiated

Police OT Reduction Continues

Remove Assumption that

Fire Modified Staffing Continues

($457.5) Fully-Burdened Deficit tobe Addressed by Budget

NOTE:

The City’s projected deficit for next

year as last published by the City Administrative Officer (CAO) was

$350 million. The CAO has revised

this figure to $336 million.

However, in order to get a complete

picture of what the budget must solve

for next fiscal year, it is necessary to

start with an alternative, fully

burdened projected deficit of $457.5million.

(millions)



Overview of Budget Balancing Solutions

Police

Sworn

Reductions

FireDeployment

Plan

One-Time

Solutions

New Revenue

Special

FundMaximization

Reductions

&

Efficiencies

Civilian

Furloughs

GENERAL FUND DEFICIT ($457.5)

Fire Deployment Plan $53.7

LAPD Sworn Salary and OT

Reductions

$100.0

Civilian Furloughs $93.4

Reductions and Efficiencies $105.3

Special Fund Maximization $51.0

New Revenue $11.0

One-Time Solutions $43.1

REMAINING DEFICIT $0.0



Budget Highlights

Proposes Reserve Fund of $177 million (4% of General Fund)

Continues Police Hiring to Attrition (9,963 officers)

Expands Summer Night Lights Program from 24 Park Sites to 32 Sites

Maintains Full Funding for Citywide Gang Reduction and YouthDevelopment Services

Restores Citywide Library Hours (6 days of service)

Provides 735 Miles of Street Preservation Provides Funding for 50,000 new pothole repairs, a 20% increase from the

prior year (from 250,000 to 300,000)

Maintains Graffiti Abatement Program and Neighborhood Council

program with minimal funding reduction (6.5% and 10%, respectively)

Provides Full Funding for Emergency Management

Continues Operations at 7 Animal Shelters Citywide

Maintains Senior Meals Program



Fire Deployment Plan

$53.7 M

The new LAFD Deployment Plan replaces the Modified Coverage Plan (MCP) that hasbeen in place since 2009.

The Plan, developed using new deployment software, utilizes Fire Department dispatch

data to model resource coverage based on response times, call frequency and incident types

with each fire station district. This data-driven approach replaces the current rotating resource closures of the MCP with

Fire company closures, redeployments, realignment of resources and flex staffing that re-

focuses emergency response to match the makeup and distribution of emergency call loads.

Example: Reduces deployment of ladder trucks in South Los Angeles–which has few structurestaller than three stories–and replaces them with additional ambulances to meet higher needs for

emergency medical services

The Plan redeploys 318 Sworn Firefighters and deletes these position authorities over three

years.

No Firefighters will be laid off



Police Sworn Salary and

Overtime Reductions$100 M

The Mayor’s Proposed FY2011-12 Budget: Maintains police hiring to attrition (9,963 Officers)

Assumes $80M in overtime savings through

management of compensated time off anddeployment of sworn resources.

Includes $20M in targeted savings throughoperational efficiencies

Deletes 105 vacant civilian positions

Provides funding for phase II of in-car video



Civilian Furloughs

$93.4 M

The City’s long-term costs for pensions and healthcare are unsustainable.Employees must begin to contribute towards a greater share of these costs to

ensure that benefits are available for current and future employees.

A tentative labor agreement has been negotiated with the Coalition of LA City

Unions, which includes an employee contribution of 4% of pay for retiree

health benefits.

The Agreement is pending ratification by union members and final approval by

the City Council.

Absent any final agreements, furloughs have been included in the 2011-12

Proposed Budget as a fiscally responsible measure to balance the budget (26

days for employees that will not receive cost of living increases and 36 days foremployees that are scheduled to receive cost of living increases).



Long-Term Solution: Reducing the Workforce

FY 2005-06 to FY 2011-12

12,333

9,195

12,791 12,538

12,181

10,983

9,721

10,389

12,006

12,445

13,37412,875 12,936

10,437

14,03413,777

13,886 14,060 14,053 14,055 14,140

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12*

General Fund - Civilian Special Funds - Civilian** Sworn (10-11: GF 13,649, SF 491)

Total 38,574 38,869 39,615 39,261 37,974 34,298 33,618

*Proposed Budget

**Includes Recreation and Park and Library; Excludes Proprietary Departments: Harbor, DWP, and LAWA

***Table includes Resolution Authorities authorized in the Adopted budget but excludes subs and resos authorized after budget adoption



Reductions & Efficiencies

$105.3 M

Examples of Reductions Include:

Elimination of 680 full-time positions 11% Reduction to Mayor’s Budget &

10% Reduction to City Council Budget

Reduction of Recreation and ParksMaintenance and Programs

15% Reduction to Cultural AffairsGrants

Realignment of Crossing Guard Services

10% Reduction to Annual Appropriationto Neighborhood Councils

Elimination of General Fund Supportfor City Channel 36

10% Reduction to Homeless ShelterProgram

Continued Reduction of General FundSupport for Capital ImprovementProjects

Examples of Efficiencies Include:

Consolidation of Treasurer with theOffice of Finance

Transfer of Northeast San Fernando

Animal Shelter to non-profit

Reduction of Outside CouncilLitigation Expenses

Transfer of Lot Cleaning, Weed

Abatement and Illegal Dumping fromStreet Services to Sanitation

Implementation of Public PrivatePartnerships at five Cultural Affairsfacilities by January 2012

Reduction of Unemployment Insurancecosts through the mitigation of layoffs



Special Fund Maximization

$51 M

Examples of Special Fund Maximizations:

General Services – Maximizes the use of Gas Tax, Proposition C,Proposition 1B, and Street Damage Restoration Funds for fleet servicesand material testing in support of the City’s 735 mile PavementPreservation Program.

Transportation – Maximizes use of Proposition C, Traffic Safety Fund,

Measure R and Gas Tax for transportation planning and infrastructurecosts, crossing guard services and implementation of Measure R projects.

Special Parking Revenue Fund – Recognizes surplus monies for transfer

to the City’s General Fund.



New Revenue

$11 M

Examples of New Revenue: Hiring of additional traffic officers to increase net revenue

collected by $9 M.

Increase Fire Department fees for industrial building and

above ground inspections to generate more than $1 M.

Increase Planning Department fees to achieve full costrecovery and generate $500k.



One-time Solutions

$43.1 M

Secures financing, through issuance of taxable, short-term notes(Commercial Paper) for:

One-time Early Retirement Incentive Program payment

Convention Center debt service payment

Debt service on the short-term notes will be repaid over fiveyears. Issuance of these notes is within established guidelines of

the City’s Financial Policies.

Currently, the CAO reports that interest rates for CP taxablenotes are extremely low ranging from 0.3% to 0.32%.



On-going Cost-Cutting Measures

Sworn Pension Reform:

In March, voters adopted a pension reform ballot measure for new public safety employees

City is estimated to save $152 million over 10 years

Healthcare Cost Reductions:

In January, Labor and Management agreed on various changes to civilianemployee benefits

Ongoing cost of active employee healthcare will be reduced by $14 million

Labor Negotiations:

Tentative Agreement with Coalition of LA Unions, which represents 19,000civilian employees, is pending ratification

Agreement would increase employee contributions to retiree healthcare,

suspend cash overtime, and delay cost of living adjustments Total savings estimated at $396 million over 4 years

City is currently engaged in negotiations with other employee representatives inan effort to secure contract savings to eliminate furloughs and restore services

Mayor's Proposed Budget 2011-12-1

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