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LA WATCHDOG - The Mayor’s Proposed Budget for the 2026-27 Fiscal Year that will be submitted to the City Council in five months will have to overcome a projected shortfall of at least $400 million. This will result in a Service Bankruptcy because of the continuing underfunding of public safety (fire and police) and the repair and maintenance of our deteriorating infrastructure (streets, sidewalks, parks, and facilities).
The City Administrative Officer’s Four-Year General Fund Budget Outlook projects a $91 million shortfall for 2026-27. But this is based on an overly optimistic revenue growth assumption of 3.1% which is not justified by the current economic conditions. This will add $40 to $80 million to the shortfall.
Underestimated expenditures include liability claims ($100 million for additional judgements and settlements over budget), Police Department new recruits ($60 million), restoring the Reserve Fund to its 5% minimum level (at least $100 million to cover the shortfalls in the current fiscal year that are currently estimated to be $250 million), raises for the police officers beginning in January of 2027 ($30-40 million), and other miscellaneous items such as sworn overtime for the Fire and Police Departments.
While this year’s budget problem is significantly less than last year’s self-induced billion dollar shortfall, the City will have to resort to similar measures, including layoffs and furloughs, the elimination of positions, the downsizing of the already understaffed Police Department, the underfunding its Capital and Technology Improvement Expenditure Program, and the cutback in the repair and maintenance of our lunar cratered streets, cracked sidewalks, and the odoriferous restrooms in our parks.
[This shortfall does not include the impact on the budget for homeless services caused by significant cutbacks in funding from the County, State, and Federal governments.]
And once again we will see the City bouncing from pillar to post, implementing short term fixes with no long term or structural changes that will allow the City to avoid its annual budget crisis and to eliminate the Structural Deficit.
Over the next five months, will the Mayor and the City Council and its Budget and Finance Committee place on the ballot measures that call for meaningful budget reform recommendations? Will they follow the recommendations of the Neighborhood Council Budget Advocates and the City Controller? Most likely not because of the opposition of special interests, including the bosses of the City’s unions.
Instead, in late January, the City Council will most likely place two measures on the June ballot that will increase our hotel and parking occupancy taxes. If approved by voters, these measures will raise around $125 million. But these are stop gap measures, not real budget and financial reforms.
Angelenos are the ones who are currently and will continue to bear the burden of the City’s Service Bankruptcy where our infrastructure is allowed to deteriorate even further and our safety is put at risk. At the same time, the Mayor, the City Council, their cronies, the union bosses, and special interests feast at our expense.
(Jack Humphreville writes the LA Watchdog column for CityWatch, where he covers city finances, utilities, and accountability at City Hall. He is President of the DWP Advocacy Committee, serves as the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and is a longtime Neighborhood Council Budget Advocate. With a sharp focus on fiscal responsibility and transparency, Jack brings an informed and independent voice to Los Angeles civic affairs. He can be reached at [email protected].)
