Los Angeles City Administrative Officer Richard Llewellyn reported today that the city's projected overspending is now more than $154 million, most of which is coming from salaries that recently increased across departments.
Llewellyn told the City Council's Budget and Finance Committee in October that the city would need to reel in nearly $148 million in projected overspending this year. That amount was raised after departments reported what they would need for payrolls. Much of the overspending is due to additional salary obligations to "various new" labor agreements.
"Our budget currently for this year is out of whack, and the projections are we're going to have to do some belt tightening," Llewellyn said.
Llewellyn's report found possible budget reductions of $38 million, but that means there's still more than $100 million with no identified funding solutions at this time.
Departments have been responsive to the CAO's requests to make cuts, Llewellyn said.
"To the extent possible, departments will be required to absorb or manage unfunded costs within existing funds," the report stated.
The committee members discussed some actions that could be taken now and in the future to reduce potential expenses.
Councilman Paul Koretz said he wants to try to chip away at what the city pays out in liabilities. A new risk management system is helping with that, but "We honestly need to do a better job," Llewellyn said.
The Los Angeles Police Department alone, which has a budget of about $1 billion, is projected to overspend by about $48 million.
"This amount is largely attributed to the new sworn and civilian labor agreements that were not budgeted in the current year," Llewellyn's report stated. "As stated earlier, the agreements have not been fully implemented in the city's payroll system."
The report stated that the CAO's office hopes to provide a clearer picture of the proposed salary increases by the end of the fiscal year report.
Since the last financial status report, Llewellyn's report stated that the reserve fund, which is used for the city's largest emergencies, experienced a net decrease and is now about $408 million, but city officials said they don't want to resort to using those funds for salaries.