Los Angeles County officials Monday presented a $23.78 billion proposed budget that would not result in any major cuts in public services.
"It's a balanced budget that will result in no layoffs, no furloughs, no service cuts, no major reduction in anything that we do," county Chief Executive Officer William Fujioka said at a news conference at the downtown Kenneth Hahn Hall of Administration.
The draft budget is $565 million lower than last year's spending plan and covers the county's fiscal year beginning July 1.
It includes recommendations for closing a $75.8 million gap between revenues and expenses -- less than one-sixth the 2010-11 deficit and less than half last year's gap -- without using any of the county's reserves and without imposing further cost-cutting measures on county departments that have already
absorbed more than $360 million in cuts.
"We've gone through about five years of very, very difficult financial times," Fujioka said.
Public safety unions recently agreed to a deal that offers no cost-of-living increases for employees, helping the county keep costs down.
"Our employees have stepped up. Union leadership has recognized that we're going through a difficult time," Fujioka said, adding that county officials still hoped to negotiate similar agreements with other unions.
But he seemed to signal that the county had turned a corner, saying "We're seeing growth."
One indicator of that growth is an estimated 3.4 percent increase in sales tax revenues, which have been rising for the past two years.
As unemployment has dropped, the demand for county services, at least among the indigent, has also decreased. Fujioka said the county welfare caseload peaked in August of last year at 113,034 people. He expects the county will spend $27.4 million less on welfare payments in 2012-13.
But one big unknown -- with the potential to cut $50 million from the county's general fund -- is how much the county will collect in property taxes in the coming year.
County Assessor John Noguez recently shocked the Board of Supervisors with a dramatic change in his forecast for property tax revenues. Noguez cited market data showing drops in property values on the order of 4.5 to 5 percent from September to January and said those changes could result in an $11 billion cut to the county's tax base.
Though total taxes collected would still be up from the prior year if Noguez' estimates prove correct, the size of the shift was enough to prompt an audit of his department.
But Fujioka said he was confident that the county could manage the potential drop in tax revenues. While he repeatedly said he would wait for the results of the audit before making changes to the draft budget, Fujioka also seemed to imply little faith in Noguez' estimates.
"I have concerns about the accuracy of that (number)," Fujioka said, later adding, "It hasn't gone down as drastically as has been represented."
He highlighted data showing that the unsold inventory of homes is down to a 5.7-month supply and sales are up 12.7 percent since February 2011 amid what he called a "huge reduction in foreclosures."
The county holds $176.8 in reserves -- untouched in the draft budget -- and has relatively little debt outstanding, according to Fujioka. But it also continues to see falling investment returns in a low-interest rate environment, making revenue from property taxes important to future stability.
The CEO pointed out that the tax base has significant embedded value because about 15 percent of county properties are still taxed at 1975 levels. Those assessments will likely jump significantly when those properties are sold someday.
The proposed budget includes $1.1 billion in recommended capital spending, including $380 million for health and mental health facilities -- such as construction at the Martin Luther King Jr. medical campus and a new mental health clinic and surgery and emergency suits at Harbor-UCLA Medical Center -- and $367 million for public protection facilities, like new fire stations in the Santa Clarita Valley and security improvements at juvenile halls and camps.
And the county plans to hire 185 new employees, including adding 157 law enforcement positions to the Sheriff's Department.
Several new cost-saving initiatives are included in the budget, including a plan to save $1.9 million by installing energy-efficient lighting and another $1.7 million by consolidating county email accounts. Fujioka said cost-saving measures have already cut annual operating costs by $255 million.
The budget does not yet incorporate the impact of state budget cuts because those numbers are still expected to change. Based on Gov. Jerry Brown's January 5 proposal, the county would lose an estimated $12.1 million in funding, according to Fujioka.
Monrovia's representative in the 5th District, Supervisor Michael Antonovich, focused on state cuts in his comments on the budget proposal, noting that California's "rising deficit continues to impact every school district, county and city in California."
The state has shifted responsibility for supervising parolees and jailing low-risk inmates to counties and has allocated monies to cover those costs. By June 30, Los Angeles County will have run up a deficit of $6 million for those services and crime is on the rise, according to Antonovich.
"Violent crimes have increased 0.82 percent and serious property crimes reported have increased by 6.09 percent in sheriff's patrol areas countywide for the first quarter of 2012 as compared to the same time frame last year," he said.
The budget will be formally presented to the Board of Supervisors at today's weekly meeting and, as Fujioka stressed today, will undergo numerous changes as it proceeds through a process of public hearings and incorporates impacts from both state and federal budget proposals.
What do you think of the new budget?