Now that proposed tax increase has failed, how does L.A. close budget gap?

measureA.jpgYou got me. L.A. voters handily defeated Measure A, which would have added a half penny to the sales tax and generated enough revenue to make up most of next year's shortfall. They apparently didn't trust city officials to spend the money wisely - and that's understandable. The tax proposal was lousy public policy, but it also was the least of all the possible evils - not to mention the most expedient (trying to control pension and health care costs is a nice idea, but the political and legal realities make it nearly impossible). All of which gets back to the post-election question: How does L.A. come up with the $200 million or more to make up for next year's shortfall? The city's budget head, Miguel Santana, has warned of further reductions in core services. From his recent report:

With over 70 percent of all unrestricted revenues going toward public safety, it is impossible to establish any scenario where dramatic reductions in public safety are not made should the sales tax measure not pass. After accounting for all restricted revenue and all the programs that are charter mandated including library, recreation and parks, police, fire, transportation, building and safety, planning and the convention center, the City's discretionary spending is limited to only $359 million or 5 percent of the entire $7.2 billion budget. The discretionary (5 percent) portion of the budget pays for the City Attorney, Animal Services, Controller, Cultural Affairs, Emergency Management, Council, Mayor, City Administrative Officer, City Clerk, Disability, Neighborhood Empowerment, Treasurer- Finance, and the Zoo. The bottom line is that there is simply little left to cut without deciding to eliminate entire programs all together or accepting that the quality of all programs, including public safety will be dramatically reduced.

The question is whether "dramatically reduced" is the same as "noticeably reduced." Not to seem melodramatic, but will people die because not enough cops and firefighters are available or because a 911 operator doesn't pick up in time? Then and only then will we reach a breaking point in city services that Angelenos will start to notice. This is why Santana is in a bind: The guy has done yeoman's work in scotch-taping a disintegrating city government - as well as in warning that revenue projections simply don't match cost projections - but so far his cuts haven't really impacted the lives of most Angelenos. That's a big reason why Measure A went down. Truth is, you can still count on emergency personnel to arrive within a few minutes of calling 911, on trash being picked up once a week, on some semblance of road repair, and on parks and libraries staying open much of the week. None of these core services is operating optimally, but at least they are operating. Santana has said that at some point he runs out of magic tricks. Nobody believes him - everybody assumes that the money will pop up from somewhere. Just don't get sick or held up.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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