Report 98018 Summary - April 1998

Los Angeles County


The Future Holds Continuing Budget Challenges

Results in Brief

Los Angeles County (county), one of the original 27 counties in the State, is responsible for providing public welfare, health, and public safety services to about 9.6 million residents. In our four previous audits on the county's budget, we reported that the county has produced balanced budgets for each fiscal year from 1991-92 through 1997-98 after initially projecting budget shortfalls. We also reported on the steps the county took to balance its budgets, such as the use of layoffs, program curtailments, a hiring and wage freeze, additional federal financial assistance, and one-time revenue sources.

In this final report, we consider the county's fiscal outlook through 2000-01. Despite anticipated growth in general purpose revenues, we estimate that the county may face a budget shortfall in excess of $308 million by 2000-01. As in the past, the county will have to continue monitoring its budget closely and identify new sources of revenues or implement cost-cutting measures to manage this estimated shortfall. Factors resulting in the estimated shortfall include the following:

In addition to the factors causing the potential shortfall, the following conditions will likely place additional burdens on general purpose revenues: Recommendations

The county should continue to closely monitor each department's budget and the major components within it to help ensure that the county continues to meet its overall budget. In addition, the county should continue to seek long-term solutions to its budget difficulties, paying particular attention to ways it can enhance its discretionary revenues while limiting increased burdens on these revenues.

Agency Comments

The county generally agrees with the recommendations that we make in this report. In addition, the county plans to begin eliminating its reliance on excess pension funds to finance ongoing programs. Further, the county is continuing to refine its multi-year budget planning effort which will include projections for revenues and costs for two years beyond the proposed budget year.