report<\/a> released this week, city officials said they finished fiscal year 2025, which started October 2024 and ended September 2025, about $40 million over budget. This forced the city to use up a chunk of reserved monies, including about $20 million saved from pandemic-era funding and millions more previously set aside for a cannabis tax relief pilot, disaster response and a police crime lab, among other examples.<\/p>\nThe sobering forecast is the latest blow to Long Beach officials as they grapple with declining oil revenues, costly infrastructure projects ahead of the 2028 Olympics, and federal policy changes that have resulted in multi-million dollar cuts, namely to the city Health Department.<\/p>\n
California cities have limited power to raise revenue, and unlike the federal government, they are not allowed to run operating deficits. Long Beach\u2019s city funding comes largely from a share of property taxes and from business, sales, and hotel taxes that are intensely sensitive to the local economy.<\/p>\n
City officials blamed the budget gap on a steep drop in every tax revenue \u2014 a combined $26 million less than expected \u2014 as well as flat or diminished state and federal grants that left the city\u2019s Health Department about $14 million in the red.<\/p>\n
Exacerbating this were increased payroll expenses from work-related injuries and sizable liability payouts, as well as damage and vandalism to public property. Salaries and benefits have also risen \u2014 thanks, in part, to the city closing its vacancy rate to about 18% that year \u2014 which tightened extra cash on hand.<\/p>\n
Without a clear estimate for this year, officials say their previous estimate of a $39.3 million deficit in fiscal year 2027 has grown to between $60 and $80 million.<\/p>\n
The city\u2019s annual budget is around $3.7 billion total, but most of that money outside of the $750 million general fund is restricted for certain purposes. This city has about $68 million across several reserves, according to the report.<\/p>\n
City Manager Tom Modica told City Council members Tuesday that he doesn\u2019t expect any \u201cmajor impacts to service or layoffs\u201d in 2025 or 2026, but reductions are almost inevitable in 2027, according to the report. Without saying it specifically, Modica warned the City Council will need to \u201clay out specific plans on what would need to be reduced\u201d to return to solvency.<\/p>\n
\u201cWe haven\u2019t had to do that in a couple years, but these budget waves go in cycles,\u201d Modica said.<\/p>\n
To help cover the city\u2019s bills this year, Modica set the goal in December for departments to save 3% of their budget wherever they can manage, which would net about $22 million. They previously saved about $7 million in a similar effort last May.<\/p>\n
It\u2019s a directive, he said, \u201cto be frugal, to postpone expenses where they can, to try to maintain services to the very extent that they can, but to potentially leave some positions open.\u201d<\/p>\n
Another issue going forward is figuring out how the city will cover the expenses of its health Department, which ended the 2025 budget year with a $14 million deficit.<\/p>\n
A majority of the department\u2019s $254 million budget is derived from state funds, which have seen little growth and been outpaced by rising expenses.<\/p>\n
Millions more dollars have been pulled by the federal government since last year, far more, Modica said, than the roughly $4.3 million previously reported.<\/p>\n
The city learned last week they were to lose a $9 million federal health infrastructure grant.<\/p>\n
Long Beach officials have increasingly noted that shifting federal policies on tariffs, deportations and reductions in federal spending have combined to dampen the economy in Southern California and its tourism, business and property tax revenues.<\/p>\n
\u201cWe know the federal government, the state government and most jurisdictions are seeing the potential impacts of what\u2019s happening in our economy; it\u2019s a telltale sign of what\u2019s to come,\u201d said Mayor Rex Richardson. \u201cWe hope that the impacts of tariffs and all those things and spending and all of that turns around and confidence comes back.\u201d<\/p>\n
Moving forward, Councilmember Cindy Allen asked that the matter be made into a public presentation at a future council meeting.<\/p>\n
\u201cIt helps us to explain to our constituents the situation that we\u2019re in and why we can\u2019t do things that we used to do on some of their projects because we have tough years ahead,\u201d Allen said. \u201cBut it doesn\u2019t help if we\u2019re not getting the full picture to the public.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Long Beach just limped its way out of last year\u2019s money problems on splintered fiscal crutches. It probably…\n","protected":false},"author":2,"featured_media":183495,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[131,133,132],"class_list":{"0":"post-183801","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-long-beach","8":"tag-long-beach","9":"tag-long-beach-headlines","10":"tag-long-beach-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/183801","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=183801"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/183801\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/183495"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=183801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=183801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=183801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}