On the heels of the latest job report indicating the State of California’s continues to struggle with job gains as a result of the global economic recession, today Los Angeles City Controller Wendy Greuel released her Preliminary Financial Report for the City and warned of a long road ahead for fiscal recovery.
Greuel said that the economy is showing some signs of optimism, however in order to have real solutions that confront the City’s budget problems, outstanding issues and one-time fixes need to be avoided.
“My job is to watch out for the taxpayers. With a Reserve Fund balance below five- percent coupled with ballooning banked overtime hours, the City is treading in treacherous financial waters,” said Greuel.
Greuel also noted that even though the City has recently initiated steps towards pension reform, the budgetary impact of that decision has yet to be determined.
Greuel believes that the following steps need to be taken immediately to get the City’s fiscal house in order:
·Minimizing banked compensated absences by year-end.
·Change City encumbrance policy to allow for the systematic release of encumbered funds towards making them available for maintaining core services.
·Fully implement Performance Based Budgeting to increase transparency and accountability of departments for every dollar spent.
While the Reserve Fund balance at the end of fiscal year 2011-12 showed receipts totaling $242.3 million, adjustments to re-appropriate funds to departments brought the total down to $224.9 million, less than the 5 percent prescribed by the City’s Reserve Fund Policy. The Mayor and City Council members must take a close look at the books to ensure that they make every effort to both reach and maintain a 5% balance in the City’s Reserve Fund.
A copy of the Controller’s report to the City is attached.
Controller Greuel has conducted more than 60 audits and uncovered more than $150 million that the City has lost to wasteful spending, fraudulent activity, and abuse of city resources.
For more information, log on to the Website of Los Angeles Controller Wendy Greuel:http://controller. lacity.org/index.htm