Los Angeles is facing a city budget deficit of just under $1 billion, due in large part to the extraordinary volume of liability claims stemming from lawsuits against the city. Los Angeles budgeted $100 million in 2025 for liability claims, but as City Administrator Matthew Szabo shared with the Los Angeles City Council in March of this year, “we are likely to spend $320 million,” exceeding what was budgeted by 220%.
Further complicating matters, Szabo shared that Los Angeles finished 2024 with a reserve fund of 4%, which it was required to draw upon, “to cover many of these extraordinary liabilities,” leaving the city well below its 5% minimum reserve fund threshold. Los Angeles will likely need to borrow at least $80 million to cover payouts, and, “based on current interest rates, it could cost the city as much as $20 million in interest,” to borrow that money.
Given the city’s dire financial situation, in April, Los Angeles Mayor Karen Bass “unveiled a proposed $13.9 billion municipal budget for fiscal year 2025-26, which includes more than 1,600 layoffs and the consolidation of four city departments in an effort to eliminate a nearly $1 billion deficit.”
“Liability settlements have tripled from backed-up lawsuits during the pandemic in uncapped damages,” Bass said, drawing a direct line from the increase in liability suits to the city’s financial crisis.
Click this link for the original source of this article.
Author: JBaron
This content is courtesy of, and owned and copyrighted by, https://www.offthepress.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.
