{"id":183678,"date":"2026-02-19T00:03:06","date_gmt":"2026-02-19T00:03:06","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/183678\/"},"modified":"2026-02-19T00:03:06","modified_gmt":"2026-02-19T00:03:06","slug":"las-consecutive-deficits-call-for-bold-government-reforms-controller-urges-daily-breeze","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/183678\/","title":{"rendered":"LA\u2019s consecutive deficits call for \u2018bold\u2019 government reforms, controller urges \u2013 Daily Breeze"},"content":{"rendered":"

Revenue shortfalls, rising liability payouts and departmental overspending contributed to a second consecutive annual budget deficit for Los Angeles, City Controller Kenneth Mejia<\/a> reported.<\/p>\n

On Wednesday, the controller\u2019s office released its Annual Comprehensive Financial Report for the 2024-25 fiscal year, which ended June 30, 2025. While the report recognized that L.A.\u2019s deficit is a \u201cculmination of decades of unsustainable budgeting,\u201d it also found that crumbling infrastructure and reduced city services have worsened since 2023.<\/p>\n

Mejia repeated his urgent call for Mayor Karen Bass<\/a> and the City Council<\/a> to make \u201cbold\u201d governmental reforms.<\/p>\n

\u201cWe\u2019ve gone from record levels of General Fund Reserves of $648 million two fiscal years ago to $420 million,\u201d Mejia said in a statement. \u201cIn addition, four rating agencies (S&P, Fitch, Moody\u2019s and Kroll) have given the City a \u2018negative outlook\u2019 with the same concerns that we have been raising over the past three years coupled with the potential liabilities and damages from the Palisades fire<\/a>.\u201d<\/p>\n

Report highlights included:<\/p>\n

\u2014 Revenues came in $160 million below budget projections, prompting the City Council and Bass to tap reserve funds to cover the shortfall<\/p>\n

\u2014 Liability claims represented the largest area of overspending, exceeding the $87 million budgeted by $199 million \u2014 more than 228% \u2014 for a record total of $287 million during the fiscal year. Departments with the highest liability payouts included police ($152 million), street services ($44 million) and transportation ($20 million)<\/p>\n

\u2014 Capital improvement projects accounted for the largest area of underspending, with the city spending $25 million, or 19%, of the $131 million allocated for the category<\/p>\n

\u2014 Revenues increased by $234.9 million, or 3.4%, from fiscal year 2023-24, primarily due to higher property and business tax collections<\/p>\n

\u2014 Expenditures rose by $63.8 million, or 0.9%, from fiscal year 2023-24, largely driven by increased salaries and employee benefits<\/p>\n

Mejia urging city leaders to curtail prolonged overspending.<\/p>\n

\u201cAlthough we are halfway through the current fiscal year, the city continues to have General Fund budget challenges. The current fiscal year\u2019s budget assumes modest revenue growth, however revenue has been relatively stable during the first half of the year,\u201d Mejia said.<\/p>\n

Unchecked overspending and liability claims will be the cause of financial troubles, Mejia added.<\/p>\n

\u201cWhile departments are expected to absorb or manage remaining costs, many departments are unlikely to be able to. This could result in the use of the Reserve Fund and in future fiscal years, more furlough days and the risk of more layoffs,\u201d Mejia said.<\/p>\n

The controller also recommended that elected officials adopt a two-year budget, implement a comprehensive capital infrastructure program and pursue a more transparent budgeting process.<\/p>\n

He further urged Bass and the City Council to expand Los Angeles\u2019 tax base rather than relying primarily on additional sales taxes, such as a vacancy tax or levies on rideshare companies and autonomous vehicle operators.<\/p>\n

Mejia also called for stronger accountability measures for departments that overspend or generate liability claims, along with consideration of performance-based and participatory budgeting models.<\/p>\n

\u201cGuiding the city back to fiscal health will not be easy, but we can do it. I know we can. It will only get harder the longer we wait,\u201d Mejia said.<\/p>\n

In response to the controller\u2019s annual report, Bass expressed appreciation for Mejia\u2019s \u201cdiligence in forecasting revenues and anticipating trends that will impact our budget outlook in the next fiscal year.\u201d<\/p>\n

She pointed to what she described as promising trends \u2014 including rising property and business tax revenues \u2014 that could help bolster the city\u2019s finances. Bass said the city will work to address \u201cCity Hall inefficiencies\u201d and reduce costs.<\/p>\n

She added that those efforts can continue alongside initiatives to reduce homelessness, lower crime, clean city streets, repair broken street lights and strengthen neighborhoods ahead of upcoming major events.<\/p>\n

\u201cI look forward to continuing to work in partnership with Controller Mejia on these priorities as we proceed into \u201926-27,\u201d Bass added.<\/p>\n

In a statement, City Councilmember Eunisses Hernandez<\/a>, a member of the council\u2019s Budget and Finance Committee, said the report reinforces concerns that the city cannot rely on short-term fixes amid growing structural deficits.<\/p>\n

\u201cYears of draining reserves, soaring liability payouts, and underinvestment in infrastructure have left us in a perilous financial position that our communities are now forced to absorb. We need transparent, multi-year budgeting rooted in long-term planning and fiscal responsibility,\u201d Hernandez said.<\/p>\n

The full report is available at https:\/\/pafr25.lacontroller.app\/.<\/p>\n","protected":false},"excerpt":{"rendered":"Revenue shortfalls, rising liability payouts and departmental overspending contributed to a second consecutive annual budget deficit for Los…\n","protected":false},"author":2,"featured_media":183679,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27],"tags":[2076,7,4132,48,52,51,205,47,5436,137,50,49,100,13],"class_list":{"0":"post-183678","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-los-angeles","8":"tag-budget","9":"tag-california","10":"tag-karen-bass","11":"tag-la","12":"tag-la-headlines","13":"tag-la-news","14":"tag-local-politics","15":"tag-los-angeles","16":"tag-los-angeles-city-council","17":"tag-los-angeles-county","18":"tag-los-angeles-headlines","19":"tag-los-angeles-news","20":"tag-news","21":"tag-politics"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/183678","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=183678"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/183678\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/183679"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=183678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=183678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=183678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}