Los Angeles County unveiled a $24.7 billion proposed budget Monday that is in the black for the first time since the Great Recession, though officials cautioned that the costs of federal health care reform and union demands for raises could create new worries later in the year.
County CEO William Fujioka projected the ongoing economic recovery would boost revenues by $218 million during the fiscal year beginning July 1, finally enabling departments to avoid cuts that had been the norm for the last five years.
"We have a county that has weathered a very, very difficult storm," he said during a news conference.
Last year at this time, Fujioka proposed a 2012-13 budget that was $23.8 billion. But additional unexpected revenues came in during the year that brought the final spending plan up to $25.4 billion. So technically the new budget proposal is a 3 percent drop from the actual current year, but officials are still looking at it as a positive development, in part because this is the first time in several years the county did not have to dip into its reserves to balance its books. Also, property tax collections are projected to go up by 2.9 percent and sales tax collections are projected to go up by 4.1 percent.
Nevertheless, officials remained concerned because the federal Affordable Care Act will take effect midway through the fiscal year and the county is continuing to take on additional responsibilities because of the state's public safety realignment.
"Things appear more stable but we're by no means out of the woods," Supervisor Don Knabe said.
Fujioka said the Affordable Care Act, also known as Obamacare, would require the county Department of Health Services to make improvements to be competitive with other health care providers.
"The department is trying to keep 300,000 lives in our system and, to do so, our system has to change," he said. "We have to be a system that is responsive to the needs of patients, and we have to create an environment where they'll come back to us and they'll stay with us."
The county is also under pressure to provide workers with pay raises.
After agreeing to endure five years without salary or cost of living increases during the economic crisis, members of the Service Employees International Union Local 721 plan to hold a massive rally Tuesday at the Board of Supervisors meeting when Fujioka formally submits his budget plan.
Several thousand nurses, social workers, tax assessors, clerks and other employees are expected to attend, and many have said they would bring their children along.
"Across the nation, the 1 percent are expanding their fortunes as working families struggle to get by. With this budget, L.A. County can take the lead and narrow the gap in Southern California," said Alina Mendizaba, a county health care worker and one of the union's board members. "It's time to invest in the public sector by giving tens of thousands of L.A. County workers a raise."
Supervisor Mark Ridley-Thomas acknowledged the workers' sacrifices were an important factor in the county's recovery from the recession, but added it was part of a quid pro quo.
"The unions agreed to forgo wage increases for five years but the county also did its part by agreeing to pay for health care subsidies that so far have amounted to $167.349 million -- an agreement that will remain in force for years to come and an amount that will continue to increase over time," Ridley-Thomas said in a statement. "The county also agreed to not have layoffs or furloughs."
"Now that we are finally starting to see a turnaround and stabilization in our economy, we must proceed with caution but also optimism with our union partners," he added. "Workers are indeed entitled to a wage increase, but any increase needs a sustainable source of funding and must be fiscally prudent.
During the economic crisis, the county dealt with a combined total of $1.2 billion in deficits over the last five years, including $360 million in 2009-2010 and $491 million in 2010-2011.
The county's various departments saw their budgets slashed an average of 15 percent. Three of them endured cuts exceeding 30 percent.
Even with the positive economic outlook, however, Fujioka said there would not be a wild dash to fill the 2,100 county jobs that were deliberately left vacant to save money.
"The expansion (in services) will not be immediate," he said.
"There are some programs I personally feel we need to expand, especially as they support the Affordable Care Act and the public safety realignment program," he said. "But we also need to correct any structural deficits in departments first -- restore some of the cuts."
Fujioka did propose allotting $16 million to help the Sheriff's Department fulfill the recommendations of the blue-ribbon Commission on Jail Violence to stop deputy abuses of inmates, and hiring 107 workers to help implement federal health care reform, among other new expenses.
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