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 [ LA WATCHDOG ](https://mail.citywatchla.com/index.php?option=com_content&view=category&id=12)

#  LA’s Unbalanced Balanced Budget

November 17 2025

Written by Jack Humphreville.

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LA WATCHDOG - The [First Financial Status Report](https://cao.lacity.gov/budget/20251029%20CAO%202025-26%20BUDGET%20-%20FIRST%20FINANCIAL%20STATUS%20REPORT.pdf) prepared by the City Administrative Officer indicated that the City’s financial position is “manageable” even though the City faces “pressures and risks that could cause increased challenges as the year progresses.” This is an understatement.

For the first three months of the fiscal year, there are over expenditures of $263 million. The primary culprits were the Fire Department ($88 million), the City Attorney (litigation expenses of $34 million), the delay in the implementation of the Solid Waste Recovery Fee ($30 million), and the Police Department ($27 million). These were offset, in part, using Unappropriated Balances (reserves), resulting in year-end overspending of $80 million.

\[While revenues for the General Fund are $80 million above plan, this trend is not expected to continue. There is weakness in property and hotel tax revenues and lower reimbursements are expected from special funds and proprietary departments. There will not be any surplus revenues over plan to offset any overspending.\]

This shortfall is expected to increase. Liability claims will add $100 million. The LAPD budget will be $60 million over budget because of the need to offset the retirement of 500 to 600 officers. There will also be the usual overspending by various departments. The net result is that this year’s budget will be at least $250 million in the red.

This shortfall does not take into consideration the necessary funds to repair and maintain the City’s infrastructure. Public safety is also underfunded. Nor are the “savings” using the Voluntary Overtime Bank by the LAPD or the City’s continuing failure to pay its DWP power bill on a timely basis considered.

All this red ink will put increased pressure on the already stressed Reserve Fund, which has only $412 million in assets, an amount this is slightly above its minimum level of 5% of the General Fund revenues ($8.2 billion).

To manage this year’s expected shortfall, the CAO and the Budget and Finance Committee (and its newly formed Advisory Committee) need to give us an honest assessment of the budget and Reserve Fund for the rest of the year. The Four-Year General Fund Budget Outlook also needs to be updated to reflect current circumstances, lower levels of revenue growth, the impact of future labor agreements, and the cash needed to fund the Convention Center’s $2.6 billion renovation and expansion.

We have heard a lot of chatter about transparency. Now is the time for honesty, truth, and transparency.

***(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 **<lajack@gmail.com>**. )*

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