April 17 (Bloomberg) -- A rebounding Southern California economywill increase revenue to Los Angeles by 5.1 percent next year,though locked-in employee costs are growing even faster, CityAdministrative Officer Miguel Santana said.

In an analysis of Mayor Eric Garcetti’s budget proposal, Santanapredicted that expenditures would exceed revenues through 2018,requiring the second-largest U.S. city to rely on one-timemeasures, such as transfers from a parking revenue fund, to balanceits budget.

Garcetti, a 43-year-old Democrat who took office last year,proposed a $5.1 billion budget for the year beginning July 1 thatmaintains a $61.9 million reserve while increasing spending onsidewalk and road repairs. The mayor postponed his plans to phaseout the city’s business tax until next year.

“In the context of a steady economic recovery, the mayor’sproposed 2014-15 budget stays the course by complying with thecity’s responsible fiscal policies and moving toward eliminatingthe structural deficit by 2018-19,” Santana wrote.

Costs for employee salaries, benefits and pensions will increaseby $192 million, or more than 10 percent, the city’s top budgetofficial said. Lowering the investment return forecast for thecity’s police and fire pension fund by 0.25 percentage point, whichis under discussion, would require an additional $80 millioncontribution from Los Angeles’ general fund, Santanacalculated.

The city’s credit is rated third-highest by Moody’s InvestorsService at Aa2, and fourth-highest by Standard & Poor’s andFitch Ratings at AA-

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