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FINANCIAL POLICIES OF THE CITY OF LOS ANGELES

INTRODUCTION

The City of Los Angeles is committed to implementing and maintaining strong fiscal responsibility and
financial discipline and has incorporated these principles into a set of comprehensive City Financial
Policies.

There are six sections of the City’s Financial Policies, as follows:

 Fiscal
 Capital and Technology Improvement
 Pension and Retirement Funding
 General Fund Reserves
 General Fund Encumbrances
 Debt Management

FISCAL POLICIES

The Fiscal Policies are intended to ensure that the City functions within the limits of its financial
resources. The City must make budget decisions to maintain a balance between revenues and
expenditures both in the current year and on an ongoing basis so that the public can realize the benefits
of a strong and stable local government that delivers municipal services to City residents. The City must
base spending decisions on their impact on measureable goals. They must further adequately address
the City structural costs, including those related to employees, capital property and equipment
maintenance, and legal liabilities. In order to ensure adequate funding for these spending needs, the City
must protect and maintain its current diverse revenue base and ensure that, where possible and
appropriate, that the individuals that benefit from specialized services pay the reasonable costs of those
services. While the City must make significant financial decisions as part of the budget process, it must be
prepared to make required adjustment during each fiscal year. Finally, the City must ensure that its
budget is transparent in order to enable public engagement. In order to achieve these goals, the Fiscal
Policies require the City to:

 Achieve structural balance both in the current fiscal year and on an ongoing basis so that projected
revenues cover the costs of anticipated services.
 Engage in performance budgeting to ensure that the City makes funding decisions to advance
strategic plans with measurable goals that are transparent and regularly evaluated.
 Make responsible choices about employee-related costs that the City both negotiates in consideration
of financial impacts and fully funds.
 Limit changes to the adopted budget.
 Protect unrestricted revenue sources, seek new and diverse revenues, and not reduce revenue
during the year without corresponding expenditure reductions.
 Assess fees levels and seek to recover the reasonable cost of a service where appropriate.
 Protect the integrity of special funds, establish a goal that special funds pay all related costs, and
encourage special fund administrators to establish reserves.
 Ensure transparency in financial decisions by publishing clear and accurate budget data, reporting on
the City’s financial condition periodically, and reporting on the financial impacts of proposals.
 Sell surplus equipment and real property at market value.
 Make adequate investment to maintain real property and equipment.
 Set aside funding to pay for settlements and judgements and report on those payments.

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