Business & Economy

What LA Mayor Garcetti proposes in new budget

Los Angeles Mayor Eric Garcetti released his 2018-2019 city budget plan that calls for new spending on housing the homeless, traffic safety and cannabis regulation enforcement.
Los Angeles Mayor Eric Garcetti released his 2018-2019 city budget plan that calls for new spending on housing the homeless, traffic safety and cannabis regulation enforcement.
Kevork Djansezian/Getty Images

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After delivering a State of the City speech earlier this week that promised big spending increases to fight homelessness, Los Angeles Mayor Eric Garcetti Thursday released his proposed $9.9 billion budget for the upcoming fiscal year. 

Garcetti's proposal boosts the city's total budget from $9.2 billion last year, or by about 7.6 percent.

The new money comes from rising tax revenues chalked up to a strong economy, as well as new bonds and tax increases approved by voters in November 2016. 

Other proposed new spending is aimed at fixing the city's aging infrastructure, including $41 million for new sidewalks, $73.4 million for street reconstruction, and $147.8 million for road maintenance.

The City Council will hold hearings on the mayor's budget proposal before a final spending plan is approved. The first of those hearings is scheduled on April 27 at 1 p.m. before the council's Budget and Finance Committee.

At a City Hall press conference Thursday, the mayor fielded a slew of questions from reporters on homelessness.

"We have housed more people than were homeless when I started. Flip side, though, why it’s so bad, is the drivers keep pushing more people in," he said, meaning the factors that increase homelessness haven't gone away.

If the number of homeless continue to increase, he warned, the city would face an “almost undefeatable spout.”

Last year, officials warned that the city would face a "structural deficit" created by spending more than revenues over the next few years. At the time, the city's two employee pension funds also expected to reduce their investment earnings assumptions, which would have added substantially to the city's retirement costs — expenses that already account for about 20 percent of the general fund. 

"I've never believed that we've had a structural deficit ever," Garcetti said. The budget has been balanced in the past and all gaps covered, he said. The mayor added that this year the deficit was closed without cuts to services or positions.

Pension costs for the city’s public employees, meanwhile, are projected to increase by $91.8 million over the next year.

The council will likely take up these issues again. But for now, here are some of the highlights from Garcetti's 2018-2019 budget:

HOMELESSNESS

The mayor's proposal says spending on homelessness will total $430 million, up from $178.5 million in the year before. The biggest chunk of the funding comes from Proposition HHH, a $1.2 billion bond measure passed by voters in 2016. It adds more than $238 million in new spending for the creation of 1,500 permanent supportive housing units and $36 million for shelters and resource centers. 

The budget would create a $20 million Crisis and Bridge Housing Fund for emergency homeless shelters in council districts across Los Angeles. 

The mayor also wants to spend more on outreach and education about the city's existing rent control law. One million dollars would be set aside for a pilot project exploring construction of granny flats and other accessory dwelling units as a way to house more residents on existing residential properties. 

TRANSPORTATION

The mayor's budget plan increases spending on road safety to $91 million. Of that money, $38 million goes toward work along high-injury roads as part of the city's Vision Zero project to eliminate traffic deaths. Last year, Los Angles spent $27 million on Vision Zero, and 2017 road fatalities overall went down by 6 percent. But pedestrian deaths continue to trend upward, increasing 17 percent in 2017.

The proposed budget also sets aside $1.5 million to prepare the city for autonomous cars. 

Funding from Senate Bill 1, better known as the state's new gas tax law, has given the city new money to spend on infrastructure. But the city is holding off on breaking ground on any new projects until 2019, because there's a chance voters could repeal the gas tax this November. 

LEGAL POT

The city's new adult-use pot taxes have not proven to be a windfall yet. The city expects its cannabis business tax to generate $30 million for the upcoming fiscal year. That’s less than the $50 million projected by City Controller Ron Galperin in June 2017.

As the city seeks to shut down black market pot shops that undercut businesses paying all their taxes, the mayor's budget proposal calls for $2.34 million in enforcement funding. Staffing at the city's Department of Cannabis Regulation will be increased to 28 positions. 

PUBLIC SAFETY

The mayor is calling for $9.3 million to hire 195 firefighters. Federal funding could be used to add four new engine companies. The budget seeks to maintain police staffing at 10,000 officers. The city is also continuing its $369 million, five-year contract with Metro for LAPD patrols on bus and rail lines. 

At his press conference, Garcetti also fielded questions about his travel schedule. The mayor, who visited Iowa last weekend, is a potential 2020 presidential candidate. There's been speculation that the mayor's political ambitions might cut short his second term.

"I'm not actually traveling statistically very much at all," Garcetti said, adding that he works seven days a week and needs to be in Washington, D.C., and Sacramento to bring dollars back to L.A.

This story has been updated.

An earlier version of this story misstated how much tax revenue Los Angeles received from medical marijuana sales. That line has been removed.