LA Mayor Garcetti Seeks 2.5% More in Final Budget as Covid Cash Fades

(Bloomberg) -- Los Angeles Mayor Eric Garcetti proposed a $11.8 billion budget for next fiscal year that calls for spending more to combat homelessness and crime, even as America’s second-largest city soon faces a drop in revenue as Covid-relief funds run out.

The budget for the fiscal year that begins in July would spend about 2.5% more than the current plan, according to the proposal released Wednesday. He said the city expects to take in about $7.46 billion of general revenue in 2022-23, a 2.2% decline from this year’s revised budget.

The city had benefited from a $640 million one-time payment from the American Rescue Plan, the $1.9 trillion pandemic-relief bill approved by Congress.

The budget proposed on Wednesday sheds light on next year’s finances for the city that Garcetti’s successor will inherit after elections later this year. Mayoral candidates Congresswoman Karen Bass and billionaire real-estate developer Rick Caruso are almost tied for support and will likely advance to a November-runoff, according a recent poll conducted by UC Berkeley Institute of Government Studies and co-sponsored by the Los Angeles Times.

The 2022-23 budget plan ramps up spending to fight homelessness to $1.2 billion compared with the current $966 million. As in much of California, Los Angeles authorities are under mounting pressure to reduce a growing homeless population that has swelled beyond 40,000.

“I’m proud to present a budget that continues along that path -- with more than $1 billion allocated to create a stream of solutions for homelessness today and the years ahead,” Garcetti said in the documents.

The budget also recommends an increase in the Los Angeles Police Department’s budget by 8.5% with a plan to boost the force to 9,735 officers from 9,470. Crime is a major worry in a city that saw homicides rise by 12% to 397 last year -- the highest in 15 years.

Growth in revenue from the city’s main tax bases is expected to moderate, according to the documents. Property tax receipts, which generate about a third of all general fund revenue for the city, are projected to increase by 4.3%, totaling $2.46 billion.

Moody’s Investors Service rates the city’s general-obligation bonds Aa2, and S&P Global Ratings rates it an equivalent AA, the third-highest rank. The outlook is stable, indicating that the companies don’t expect to cut or raise the ratings in the near term. The city entered the pandemic in a “solid position” and federal stimulus dollars helped offset revenue declines, Moody’s analysts said in October.

Los Angeles County, a wider metro area that’s home to 10 million people, on Monday presented a $38.5 billion budget for the 2022-23 fiscal year. It proposed spending $493.3 million from Measure H -- a one-quarter of a cent sales tax to fund homeless services -- and another $100 million earmarked for affordable housing.

Garcetti, who’s in his second term, has been nominated as U.S. ambassador to India and he’s awaiting the full stamp of approval from the Senate. The primary election for the non-partisan seat is June 7 and the general election Nov. 8. 

©2022 Bloomberg L.P.