Page 3 - FY 2021-22 Supporting Information

CITY OF LOS ANGELES

Richard H. Llewellyn, Jr. CALIFORNIA ASSISTANT
CITY ADMINISTRATIVE OFFICERS
CITY ADMINISTRATIVE OFFICER PATRICIA J. HUBER
BEN CEJA
YOLANDA CHAVEZ

ERIC GARCETTI
MAYOR
April 20, 2021

Honorable Members of the City Council:

The 2021-22 Proposed Budget is a historic budget. Following a year of uncertainty and
economic upheaval caused by the global COVID-19 pandemic, the City of Los Angeles is poised
to make large and impactful investments in areas of equity and justice, homelessness, economic
opportunities, and capital and technology improvements, all while preserving critical City services
and achieving the largest Reserve Fund in the City’s history. This budget demonstrates the City’s
resiliency and recognizes that its ongoing challenges require bold actions, creativity and
innovation, and an ongoing commitment to fiscal responsibility.

The hope and optimism personified in the Proposed Budget is attributed to the
improvements the City has seen with COVID-19 case rates and vaccine distributions, and
especially the unprecedented federal response in relief funding through the American Rescue Plan
(ARP). We also thank our labor partners who came to the table to help the City and the City’s
poorest residents in this time of need. Still, there is no question that without the ARP, the Proposed
Budget would have necessitated the City to rely on austerity measures beyond those anyone of
us has experienced since the Great Recession. In fact, before the ARP was passed, the balancing
plans recommended by this Office called on the City to deplete its reserves, debt finance ongoing
operations, and continue down a path of reducing its workforce and, with it, the services the City
provides. The ARP will allow the City to emerge from a year of COVID malaise, ready to take on
its most daunting problems.

There continues to be no greater challenge than addressing homelessness and this
Proposed Budget makes the largest investment the City has ever made to address homelessness.
Including Proposition HHH bond proceeds, ARP funds, state funds dedicated for homeless
services, and the General Fund, the City’s commitment to ending homelessness has never been
stronger.

Despite the mostly positive news, the City budget future remains extremely challenging,
and the Proposed Budget’s increase in the City’s reserves is necessary. First the Proposed
Budget’s reliance on the federal ARP funds is not without risk. The U.S. Department of Treasury
is responsible for distributing ARP funds to cities and it is currently developing methods and
guidance for the allocation and oversight process. If the Department of Treasury guidance restricts
the ARP funds in a way that is inconsistent with the appropriation provided in the Proposed Budget,
the City will need to reassess the proposed funding. In some cases, reductions to programs and
services may be required if alternative funding sources are unavailable. Even if programs are
eligible for ARP funds, since ARP funds are one-time revenues, increased services and new

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