The ongoing pension crisis poses little threat to Los Angeles’ hard-earned finances, says Los Angeles Controller Ron Galperin. At least, as long as the city budgets strictly and saves as much money as it can.
“Our city’s finances are stable at this time, but we need to make sure we are adequately prepared for any economic downturn that may come,” Galperin said “It’s crucial that we be prudent.”
On Tuesday, Galperin released the Los Angeles Comprehensive Annual Financial Report (CAFR) for the 2018 fiscal year, spelling out both the good and the bad of L.A.’s municipal finances. According to the report, the city has experienced strong economic growth over the past six years while overall expenses increased by less than 1 percent. However, pension costs are on the rise.
According to the report, the city spent $1.2 billion of its $9.3 billion budget on pensions last year. The pension systems reported being 84 percent funded for 2018, but the stock market has been more volatile since then, which could impact investment earnings moving forward, the report says.
Additionally, the City’s retiree health benefits were estimated to be a net liability of $2.8 billion. While that represents a funding level of 68 percent of overall projected obligations, it’s better finances than other major cities. New York has $98 billion in unfunded liability, and both Chicago and Houston are zero percent funded for retiree healthcare.
The City’s total debt load increased by $1.1 billion last year, mostly due to modernization projects by the Department of Water and Power and the Los Angeles World Airports.
Galperin’s office also released an interactive Popular Annual Financial Report illustrating in graphs and charts how taxpayer dollars are spent by the City, with data about things like the number of small asphalt repairs completed, the tonnage of recyclables collected, per capita water usage, the number of library cards issued and much more. Both can be explored at lacontroller.org/cafr2018.