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Smart Voter
Los Angeles County, CA March 8, 2011 Election
Charter Amendment LA-P
Emergency Reserve and Budget Stabilization Fund
City of Los Angeles

Charter Amendment - Majority Approval Required
Official Results

Pass: 132,205 / 66.5% Yes votes ...... 66,677 / 33.5% No votes

See Also: Index of all Measures

Information shown below: Summary | Fiscal Impact | Official Information | Impartial Analysis | Arguments |

Shall the Charter be amended to: establish an Emergency Reserve Account within the City's Reserve Fund, with an annual balance of not less than two and three-fourths percent of General Fund receipts, to be accessed only if the City Council finds by a two-thirds vote that there is an urgent economic necessity and to be replenished in the subsequent fiscal year except in the event of a catastrophe; establish a Contingency Reserve Account within the Reserve Fund for expenditures and revenue shortfalls unanticipated in the annual budget with details defined by ordinance; and establish a Budget Stabilization Fund within the City Treasury with details defined by ordinance?

Summary Prepared by Ballot Simplification Committee:
THE SITUATION:

The Charter currently establishes a Reserve Fund. Spending Reserve Funds requires a majority Council vote if the Mayor agrees, or a 2/3 Council vote to override a Mayoral veto.

THE PROPOSAL:

This measure would amend the Charter to establish two accounts within the Reserve Fund.

1. The Emergency Reserve Account must be:

  • no less than 2.75% of General Fund receipts,
  • spent only in urgent economic necessity with a 2/3 Council vote if the Mayor agrees, or a 3/4 Council vote to override a Mayoral veto, and
  • repaid the following year except in catastrophic circumstances.

2. The Contingency Reserve Account would cover shortfalls in City revenue or pay for unexpected expenses. An ordinance would determine spending policy.

This measure would also require a Budget Stabilization Fund to be established by ordinance.

A YES VOTE MEANS:

You want to amend the Charter to establish Emergency and Contingency Reserve Accounts and a Budget Stabilization Fund.

A NO VOTE MEANS:

You do not want to amend the Charter to establish Emergency and Contingency Reserve Accounts and a Budget Stabilization Fund

Fiscal Impact from Miguel A. Santana
City Administrative Officer:
This measure will formalize current financial policies adopted by the Mayor and Council and set a minimum balance that must be kept in reserves for emergencies. It also establishes a new Budget Stabilization Fund, or "rainy day fund", for use during future years when revenue shortfalls are anticipated. This measure is not expected to result in any additional revenue or cost to the City.

Official Sources of Information

Impartial Analysis from Gerry F. Miller
Chief Legislative Analyst
The City Charter currently requires a Reserve Fund in the City Budget, but does not prescribe the amount to be deposited or detail the components of the Reserve Fund. The City Council also created a Budget Stabilization Fund as a Financial Policy to moderate fluctuations in revenue.

This measure would amend the Los Angeles City Charter to require an Emergency Reserve Account and a Contingency Reserve Account within the Reserve Fund to fund unanticipated expenditures and revenue shortfalls in the General Fund. It would also mandate the creation of a new Budget Stabilization Fund by ordinance.

This measure would require that no less than 2.75% of General Fund receipts be maintained in an Emergency Reserve Account. During the annual budget process, an appropriation must be made into the Emergency Reserve Account to bring it to at least 2.75% of the anticipated General Fund revenue for the fiscal year. If funds exist in the Emergency Reserve Account from prior years, only the amount necessary to bring the Emergency Reserve Account to the 2.75% minimum would have to be appropriated into the Account.

To expend Emergency Reserve Account funds, two-thirds of the Council must adopt a finding that there is an "urgent economic necessity" and the Mayor must concur. If the Mayor vetoes this finding, the Council may approve the expenditure with a three-fourths vote. In any year when Emergency Reserve Account funds are expended, this measure would require the funds to be repaid the following fiscal year. Exceptions to this restoration requirement may be made in cases where multi-year repayment is needed, such as with a catastrophic event or other natural disaster. Exceptions must be approved by a two-thirds vote of the Council with the Mayor's concurrence, or a three-fourths vote if the Mayor vetoes, and must detail the need for the exception and set a date that repayment will occur.

This measure also would establish a Contingency Reserve Account, but would not set a minimum deposit level. Contingency Reserve Account funds may be expended for routine General Fund expenditures or revenue fluctuations. Specific funding and expenditure policies would be established by ordinance. Expenditure of Contingency Reserve Account funds would require the approval of a majority of the Council with the Mayor's concurrence, or two-thirds of the City Council if the Mayor vetoes the Council action.

This measure would establish, by Charter, the Budget Stabilization Fund within the City Treasury, with the intent of placing deposits into that Fund when the economy is strong and actual revenue exceeds the projected revenue target. Requirements for transfers or expenditures from the Budget Stabilization Fund would be established by ordinance.

This measure will become effective if approved by a majority of voters.

  Nonpartisan Information

Ballotpedia
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Arguments For Charter Amendment LA-P
YES ON PROPOSITION P PROTECTS THE CITY IN AN EMERGENCY

Like any well established business, the City of Los Angeles has put aside a reserve fund to be ready for the unknown- a major earthquake, devastating fire, civil unrest, or a terrorist attack. During the last year, however, the city dipped into this reserve fund to balance the city's budget and keep it in the black. Relying on the reserve fund to balance the budget will one day hinder the city's ability to react and rebuild when an emergency strikes. When this happens, the city will be faced with a devastating hurdle it may not be able overcome. Proposition P would resolve this issue by requiring the city to maintain a healthy reserve fund to insure it can respond to any major crisis.

YES ON PROPOSITION P PROTECTS THE CITY'S SAVINGS

Proposition P requires the city to maintain an Emergency Reserve to make sure the City of Los Angeles will always be ready for an emergency. Proposition P mandates a two-thirds vote of the City Council to take dollars from the Emergency Reserve, only after the city makes a finding of "urgent economic necessity." Once these funds are properly used, the money must be paid back to the Emergency Reserve Fund by the next fiscal year. Proposition P will also make sure that the city has a healthy contingency and budget stabilization funds to deal with the future budget challenges.

The City of Los Angeles is facing one of the most difficult economic times in its history. If proper regulations are not place on the city's reserve fund, Los Angeles will be in worse shape than it already is. Proposition P will keep the city better prepared for any disaster as well as future budget problems.

PERSONS SIGNING ARGUMENT IN FAVOR OF CHARTER AMENDMENT P

JAN PERRY
Council President Pro Tempore
City of Los Angeles

ERIC GARCETTI
Los Angeles City Council President
City of Los Angeles

BERNARD C. PARKS
Councilmember
City of Los Angeles

GENE HALE
Chairman
Greater Los Angeles African American
Chamber of Commerce

GREIG SMITH
Councilmember
City of Los Angeles

DENNIS P. ZINE
Assistant President Pro Tempore
Los Angeles City Council

CAROL SCHATZ
President and CEO
Central City Association

(No arguments against Charter Amendment LA-P were submitted)


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