City’s General Fund projected to be out of money on May 5th
(Los Angeles) – With the City of Los Angeles receiving confirmation from the Department of Water and Power (DWP) that they will not be transferring the $73 million balance from the anticipated Power Revenue Transfer to the City’s General Fund, Controller Wendy Greuel released an urgent cash flow update to the City Council and Mayor today.
“The question I have been asked most often during the budget crisis is “When will the City run out of money?” Unfortunately, we finally have the answer. Without the full Power Revenue Transfer I now project that if the City remains on its current path, the City’s General Fund will be out of money – in fact it will be negative $10 million – on May 5th, 2010,” said City Controller Greuel.
While the cash flow shortfall for May 5th must be addressed immediately, the Controller is now able to project a possible General Fund AND Reserve Fund shortfall for the end of the fiscal year June 30th.
“Without the full Power Revenue transfer, the City might not have enough money to balance the budget and the Reserve Fund balance could be anywhere from $0 to negative $43 million on June 30th, 2010, which would leave us no room to cover any additional shortfalls or unexpected emergencies.”
The Controller is responsible for General Fund cash flow to ensure that sufficient cash is available to meet all General Fund expenditure needs.
“This is the most urgent fiscal crisis that the City has faced in recent history, and it is imperative that you act now. That is why I am asking you to immediately transfer $90 million from the City’s Reserve Fund to the General Fund so I can continue to pay the City’s bills, and to ensure the fiscal solvency of the City,” said City Controller Greuel. “City employees are paid two weeks in arrears and we cannot legally permit them to work when there are not sufficient funds to pay them. That is why I am alerting you that, unless you take action to transfer $90 million from the Reserve Fund, beginning April 19th, 2010, my office may not be able to pay the salaries of all City employees and/or make payments to vendors. We have two weeks to address this crisis, which is why you must act immediately.”
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