Good morning and welcome to L.A. on the Record, your City Hall newsletter.
As financial woes plague L.A. city officials, the fiscal landscape reveals stark contrasts between the city and the county’s budgeting struggles.
Just last year, city leaders agreed to pay raises that, in retrospect, have become unsustainable as the city now grapples with a projected budget shortfall nearing $1 billion.
The city is also confronting soaring legal costs and the significant financial repercussions of the recent Palisades fire, which has caused hundreds of millions in damage.
In contrast, L.A. County is shouldering roughly $2 billion in wildfire expenses but managed to present a balanced budget proposal totaling $48 billion for the upcoming fiscal year, highlighting a fundamentally different financial situation.
L.A. County Supervisor Kathryn Barger addressed the county’s financial stability, stating, “We’re not writing checks that can’t be cashed.”
While the state of finances appears dismal for LA City, Barger explained that the county’s prudent budgeting practices have allowed them to avoid layoffs, with cuts amounting to a modest $89 million.
Despite the challenges, the county has successfully maintained its hiring and staffing levels, which contrasts sharply with the city’s potential layoffs due to poor financial forecasting.
“The city’s fiscal fiasco was a wake-up call,” said Barger, pointing to the county’s refusal to agree to excessive raises, which has safeguarded jobs.
However, this restraint came with a price.
An announcement by SEIU Local 721, which represents 55,000 county workers, indicated plans for a strike as negotiations have stalled, with union head David Green noting that employees have been without a contract for more than six months while the county appears to be slow-rolling negotiations.
County leaders are preparing to rely heavily on their sizable rainy day fund—a reserve that has remained untouched since the Great Recession—to deal with pressing legal settlements, including a historic $4 billion sex abuse settlement, the largest in U.S. history.
County Chief Executive Officer Fesia Davenport referred to the reserve as the “holy grail.”
In comparison, the city of Los Angeles has repeatedly drawn down its reserves, which had dipped below 3% earlier this year, making its financial outlook even more precarious.
Mayor Karen Bass elaborated on the roots of the city’s fiscal crisis, attributing it not only to rising personnel costs but also to a downturn in economic activity, marked by lower-than-expected tax revenues and escalating legal settlement costs.
“If all we had was the rising personnel costs, we wouldn’t even be considering layoffs or drastic cuts,” she stated in her interview, underscoring the multifaceted nature of the city’s financial troubles.
The county, on the other hand, has been informed by history.
The lessons learned from nearly facing bankruptcy in 1995 have instilled a long-term budgeting perspective among county officials, preventing reckless financial decisions that could lead to crisis.
Former Supervisor Zev Yaroslavsky remarked, “It was an embarrassment”—reflecting a collective memory of the chaos when former President Bill Clinton had to step in to rescue the county from financial collapse.
“ This was our Great Depression: We never want to be put in this position again,” he added, signaling a strong awareness among county leaders about the implications of financial mismanagement.
Nonetheless, the county’s current financial strategies may soon face new challenges from proposed federal cuts.
Just two days after the unveiling of the county’s budget, news emerged that the Trump administration plans to slash $40 billion from the Department of Health and Human Services.
This move could have devastating effects on the L.A. County Department of Public Health, which relies on federal grants for two-thirds of its annual budget, amounting to roughly $1 billion.
County health director Barbara Ferrer emphasized the severe consequences, stating that the potential $300 million loss could result in cutting 500 employees and severely hamper prevention initiatives, including efforts to address lead poisoning and sexually transmitted infections.
“This could pretty much decimate local public health as we know it today,” she expressed, conveying a sense of urgency in the wake of proposed disinvestment.
In summary, while L.A. County appears to be navigating its fiscal landscape with caution and prudence, the city struggles with multi-dimensional financial issues, prompting fears of layoffs and drastic cuts.
Despite the lower morale among employees reflected in the county union’s disappointment, officials continue to advocate for disciplined financial practices.
The recent challenges reveal an urgent need for reevaluation of budgeting strategies, especially in light of looming federal funding cuts and the ongoing repercussions of the wildfire crisis across both municipalities.
**State of Play** :
— **COSTS KEEP COMING:** The county has estimated January wildfire costs at nearly $2 billion, comprising $1 billion in lost revenue as well as additional costs such as soil testing and debris removal.
— **FAILURE TO WARN:** Reports indicate that the evacuation order for west Altadena came after dispatchers had received at least 14 fire-related calls, leading to more fatalities in that area than elsewhere.
— **POLLING PLUMMET:** Mayor Bass’s approval ratings have dipped over the past year, with factors concerning her handling of January’s wildfire situation likely contributing to the decline.
— **SHUTDOWN TIME:** A judge has announced intentions to close Los Padrinos Juvenile Hall in Downey, case after a state oversight review deemed it unsuitable for housing youths.
— **NO VISION:** An audit released by city officials on the Vision Zero program, designed to eliminate traffic fatalities in Los Angeles, identified issues in coordination and lack of political will as major factors behind its failures.
— **RESUME QUESTIONS:** The head of the Los Angeles County Affordable Housing Solutions Agency is set to depart upon the end of his contract this fall amid concerns about his qualifications.
— **TAKEOVER TAKEDOWNS:** L.A. County is moving toward increasing penalties for street takeovers, proposing to double misdemeanor fines from $500 to $1,000.
— **SEEING RED:** More than 200 members of the Los Angeles Democratic Socialists of America gathered recently to vote on priorities for the year, focusing on responses to federal threats and local tenant rights issues, with Councilmember Eunisses Hernandez in attendance.
— **WORKING OVERTIME:** Reports indicate that the Los Angeles County Sheriff’s Department spent $458 million on overtime in the last fiscal year, attributed partly to deputy shortages since the onset of COVID-19.
— **SOIL TESTING:** The county plans to allocate $3 million towards aiding homeowners in the Eaton burn area for lead contamination testing after elevated contamination levels were found in ongoing assessments.
As the complexities of navigating fiscal realities unfold, the implications of city and county budgeting will have lasting impacts on residents and their well-being.
image source from：https://www.latimes.com/california/newsletter/2025-04-19/county-budget-settlement-layoffs-l-a-on-the-record
