The Brief

An answer to Long Beach’s ongoing budget woes may be buried under dust in Sacramento.

The Long Beach City Council is in a mad dash to bring the state to the negotiating table over a decades-old contract that establishes the revenue split from the Wilmington Oil Field in and around the coastline, saying the current agreement has been a cash gusher for the state.

City officials say time is of the essence, as the legislative cycle ends next week and any items not brought forward could be tabled until at least January.

It’s an item that would restructure how much the city receives for its guardianship over what’s known as its tidelands area, a 24-square-mile swath of ocean and coastline from the Orange County line through downtown Long Beach to the ports of Los Angeles and Long Beach. The field goes about as far north as Ocean Boulevard, almost reaching the breakwater to the south, and encompasses some of Long Beach’s most precious assets: the beaches, marinas, and Convention Center.

Since 1991, the city has received 8.5% of revenues earned through oil and dry gas production in the tidelands area, pulling from the Long Beach section of the Wilmington Oil Field. Another 49% goes to the oil operator while the state takes 42.5%.

But it’s a deal that no longer makes sense, according to Long Beach Councilmember Kristina Duggan, who said Friday a reasonable city share rests between 20% and 30% of the revenue.

The city is under mounting pressure to transition its economy away from a reliance on local oil production, which is set for a dramatic decline — $300 million over the next 10 years, according to City Auditor Laura Doud. Meanwhile, the city has $1 billion in outstanding coastal projects, from a deteriorating Naples Island seawall to costly upgrades at the Convention Center.

Facing the rising cost of upkeep along the coastline, the city is expected to spend more than it earns to oversee the tidelands for the first time in 2026. Officials project future deficits through 2035 will range between $6.2 million and $10 million.

As a result, city leaders may have to divert money from other core programs and services.

“What are we going to take away? Are we going to take away our libraries? Are we going to take away our staffing at parks? Where are we going to get the money when we are using funds from the general fund to take care of every district?” Duggan said.

Meanwhile, the state expects to reap $271 million from the tidelands through 2035, according to Duggan’s office.

Oil in Long Beach has a long, intricate history, pieced together through multi-party contracts and court hearings over who is most deserving of the gushing revenues and by how much.

Oil was discovered in 1932 and was estimated to total 9.5 billion gallons' worth. In the years prior to 1955, Long Beach was awash in cash, keeping most of the oil revenue for its general fund.

Citing a trust arrangement set in 1911, the California Supreme Court in 1955 named the state as the main beneficiary, since the oil was extracted from state land beneath the water. The state declared most of the money generated from oil production as surplus and began redirecting it to Sacramento, based on the conditions when the coast had fewer needs and oil production was much higher.

Under the expectation that oil would either soon dry up or be phased out, the city agreed to a funding formula in 1964 that fixed its revenue at $1 million a year. The change in 1991 bumped the city’s yield to its current rate, which now brings in around $50 million annually. The city receives tax revenue from 2,762 active and idle oil wells that are managed by 14 oil operators.

But the current formula is out of step with reality, Duggan said, adding that the state has taken $5.75 billion from Long Beach under this formula as “surplus.”

“Our increase in responsibilities and costs is escalating far, far greater than what we can keep up with,” she said.

It’s the “No. 1 priority this next year” in state lobbying, said Mayor Rex Richardson on Tuesday. The mayor has for years lobbied the state to allow Long Beach to divert interest from a fund meant to cover the costs of decommissioning defunct oil wells, of which the city has invested millions.

“We’re going to go back to Sacramento and put options on the table,” Richardson said. “But the reality is … doing nothing is not an option for us.”

In a joint call with the governor’s office last week, Richardson reiterated his request for diverting interest from the oil decommissioning fund, while Duggan spoke on renegotiating the funding formula.

While Newsom’s office seemed open to both ideas, according to Duggan, each needed to be championed by Long Beach’s state representatives — state Sen. Lena Gonzalez and Assemblyman Josh Lowenthal.

“We need them to carry this,” Duggan said. “And we have two weeks to get some sort of traction with legislation. That’s the only way to make it happen.”

In a statement Friday, a spokesperson from Lowenthal’s office said the assemblyman looks forward to “discussing potential ideas with the city of Long Beach and the Long Beach legislative delegation.”

“With California now facing a major budget shortfall, we’ve had to make tough choices to protect vital services while keeping the budget balanced,” the statement read. “Any sudden changes to that balance could have real consequences here at home. While the city has and continues to be a good steward of the state’s tidelands — any discussions surrounding the fund’s future must be well informed, conducted responsibly, and be in the best interests of the entire state of California and the residents of the city of Long Beach in order to uphold the public trust.”

The Los Angeles region’s troubled homeless services agency announced this month that it will no longer manage the region’s federal homelessness dollars, amid scrutiny from the Trump administration.

Now, a federal court must help determine who will manage roughly $240 million in annual federal funding after the L.A. Homeless Services Authority gives up that long-held job in the coming months.

At a hearing Wednesday, U.S. District Judge David O. Carter said most of his attention is on who will administer the round of federal money that will be awarded in December and distributed next year.

The only potential near-term successor discussed in court was L.A. County, which created a new homelessness department and applied for the role. County officials have promised much stronger accountability and transparency.

But the city of L.A., where most of the region’s unhoused people live, is also interested in taking over some of LAHSA’s duties. The city could eventually try to break off and form its own regional body to receive federal funds, Carter said.

“But that’s for the future,” Carter said. “For now, we have to focus on providing for people experiencing homelessness — and also fraud and corruption.”

‘The watchdog wasn’t watching’

LAHSA has been used as a punching bag, Carter said, but he blamed recent cases of alleged theft of taxpayer funds on a broader “failure of government” by both HUD and LAHSA.

“The watchdog wasn’t watching, and the money got distributed without accountability,” Carter said.

In the meantime, Carter said, LAHSA isn’t going anywhere. He said any transition must unfold gradually to avoid displacing people from housing and services.

“We’re going to have to live with LAHSA for at least some period of time,” Carter said. “The question might be how much?”

How soon could the county take over? 

Carter said he agreed with LAHSA’s decision to entrust another administrator to manage the money.

Attorneys for the U.S. Department of Housing and Urban Development (HUD) told Carter the next round of annual funding would be distributed over 2027.

Carter acknowledged HUD may be uneasy sending that money to LAHSA, the very agency it is investigating for fraud. Carter said he was struggling with the issue himself.

Carter signaled that he wants to see federal funding transferred to the county by January if it is chosen as LAHSA’s successor.

‘The devil is in the details’

At the hearing, federal prosecutor Bill Essayli said the Trump administration would rather reach an agreement than litigate. He said “the devil is in the details” when it comes to any transition away from LAHSA.

“We want assurances of anti-fraud measures,” Essayli said. “That way the money is never stolen again.”

Carter said he hoped a transition plan would keep the parties from spending millions of dollars on attorneys’ fees that could otherwise go toward housing and services.

How we got here

In June, the Trump administration suspended LAHSA from applying for federal funding, alleging years of financial mismanagement. LAHSA then sued, and Carter blocked the suspension in August. Carter’s decision has so far held up on appeal.

LAHSA’s governing commission voted this month to give up its federal roles next year, including managing federal homelessness dollars and conducting the region’s annual homeless count. Local officials have been taking applications from organizations that want to take over those duties in 2027.

Meanwhile, investigations into fraud have been widening. Prosecutors have so far charged six people connected to L.A. homeless service providers. LAHSA has said none of its staff are implicated.

When asked if LAHSA’s current or past leadership has been culpable, Essayli recently said, "It is not against federal law to be incompetent, unfortunately.”

Major shifts happening

For decades, county, city and federal dollars have been managed mainly by LAHSA. But those funding streams are now being redirected in the wake of repeated findings of mismanagement.

L.A. County pulled roughly $300 million of its annual homelessness funding in July and gave it to its new in-house Department of Homeless Services and Housing.

That leaves the city as LAHSA’s last major funder. The City Council has explored leaving, but hasn't reached a decision yet. City staff has estimated that building a city homeless services department would take up to two years.

On the campaign trail, Councilmember Nithya Raman has pledged to exit LAHSA within her first year if elected mayor, while incumbent Mayor Karen Bass has said it would take "a couple of years."

What’s next

Carter did not rule Wednesday on federal funding. He scheduled a hearing for Oct. 27 and described it as “our decision-making day on so many matters.”

Before then, local officials are expected to select a replacement to take over LAHSA’s federal administrative roles.

Los Angeles city officials are asking LA28 to hand over a list of its contracts, saying the Olympics organizing committee could be in violation of its agreement with the city.

LA28’s annual financial report released last week included a broad review of the organization’s deals with contractors hired to help put on the event, but no names or detailed breakdowns of spending.

The Games Agreement between the city and LA28 requires the committee to submit the name, type, amount, term and purpose of each contract it has entered into worth more than $1 million.

No such list was provided in LA28’s report.

“It's inadequate, what we've been provided, and that's not acceptable,” City Councilmember Katy Yaroslavsky said at a committee meeting on the 2028 Olympics Wednesday afternoon.

Chief Legislative Analyst Sharon Tso said she has requested a full list from LA28 and is waiting to hear back.

Jacie Prieto Lopez, a spokesperson for LA28, said in an emailed statement to LAist that LA28 had received the request.

“We are working through those requests now and remain committed to meeting our obligations," she said.

Tso told the council committee she had seen a more detailed list of LA28’s contracts, but only when it was “flashed on the screen very quickly” at a meeting with her, Olympics organizers, the city administrative officer and the mayor’s office.

“So we don't have a list,” Tso said. “We don't have the names of the folks. We don't have the dollar amounts.”

Tso told the council that Olympics organizers were wary about making contracts public, due to concerns that public disclosure could harm negotiations over competitive event sponsor deals.

City Councilmember Hugo Soto-Martinez said that did not satisfy LA28’s obligations to the city.

“They can just be like, ‘Flash it, we're done, and we did our requirement,’” Soto-Martinez said.

The federal financial aid process opened this past week for students applying to college for next year. But for many California students, a source of state financial help remains untapped.

In 2022, the state launched the California Kids Investment and Development Savings Program, also known as CalKIDS, and began creating investment accounts for more than 6 million children in the state to use for higher education.

Babies born on or after July 1, 2022, can get up to $175 in their accounts, while low-income public school students can claim up to $1500.

In Los Angeles County, about 1.1 million public school students are eligible for the accounts, but fewer than 20% of kids have claimed them, said Cassandra DiBenedetto, executive director of California’s ScholarShare Investment Board. The claim rate is even less for babies — about 11%.

“The money itself, it has a long trajectory. So you have these newborns, and there's not a sense of urgency among some parents; they know the account's there, it’s been created. Parents are busy,” DiBenedetto said.

There is no deadline to claim the money, which is already growing in the investment accounts. (You do have to use the money by age 26). But DiBenedetto says kids are more likely to see themselves as college-bound if they have it — and will be able to watch the account grow over time.

“ You talk to second-and third graders who are like, ‘I'm gonna go to UC Santa Barbara,’ ‘I'm gonna go to Cal Berkeley,’” she said.

The state is working with the Los Angeles Unified School District and other school districts to get students signed up.

The city’s top financial adviser is recommending that the Los Angeles City Council deny a police department request to procure 300 additional vehicles for the 2028 Olympics and Paralympics.

The report, submitted to the council Monday by City Administrative Officer Matt Szabo, found that the L.A. Police Department would have enough vehicles to temporarily expand its fleet during the Games without the additional cars.

LAPD officials had previously requested around $31 million, arguing the additional officers deployed for the Games will need additional vehicles for their police work.

But Szabo disagreed in his report, finding instead that the department would soon have a large enough fleet.

“Given the current available vehicles and new vehicle procurements which have already been funded, it is not recommended to authorize the procurement of any additional police vehicles for the 2028 Games deployment,” Szabo wrote.

An LAPD spokesperson declined to comment on the city administrative officer’s report. Previously, the department has emphasized that its request seeks only to temporarily expand its fleet, with plans to retire old vehicles after the Games.

The police department has offered different estimates of how many additional vehicles it will need to patrol the Olympics. Two months after the LAPD asked for an additional 300 vehicles, the department released another report estimating an even higher need: 576 police vehicles.

Either way, Szabo’s report found that more than 1,100 police vehicles not yet in use by the department were funded in the past three budget cycles. He said those should be sufficient for the Olympics.