Los Angeles faces a structural deficit masked by one-time funds and rising costs. Without transparent budgeting and long-term planning, essential services will continue to decline. The Budget Advocates call for honest numbers and responsible spending—now.

THE CITY’S FISCAL REALITY

According to the CAO’s Second Financial Status Report, issued December 5, the City of Los Angeles is facing a $71 million budget shortfall in the current fiscal year. This shortfall is the result of nearly $250 million in overspending, partially offset through the use of $183 million in Unappropriated Balance (reserves).

 The primary sources of overspending include:

• Fire Department: $84 million

• Litigation expenses: $34 million

• Police Department: $34 million

• Sanitation: $30 million

WORSENING OUTLOOK FOR FY 2025–26

The shortfall for the current fiscal year is projected to increase to at least $200 million due to higher-than-anticipated legal judgments and settlements, unplanned hiring of additional police officers, lower levels of tourism, and a weakening economic environment. The City is expected to rely on an already stressed Reserve Fund to technically “balance” the budget

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