The Brief

A recent warning about the state of city finances in Los Angeles struck a dire note.

“We will need to be vigilant in how we proceed,” cautioned Matt Szabo, the city administrative officer at a Budget and Finance Committee meeting last week. “Our reserves are getting dangerously close to the ... emergency level.”

The reasons why are detailed in a financial status report Szabo released late last month. It documents precarious city finances driven by a mix of dwindling revenues and some big unexpected expenses, including the costs of responding to the L.A. wildfires.

Another major over-expenditure: civil payouts.

The city of Los Angeles is expected to pay at least $320 million in settlements and judgments this fiscal year, which ends in June, according to the financial status report. That’s more than three and a half times the money budgeted for such risks.

Liability payouts — which settle claims and lawsuits against the city for wrongdoing, including internal staff harassment, police use of force and injuries — have been a considerable expense for many years. In the current fiscal year, the city has paid more than $37 million in just two cases — the LAPD bomb squad fireworks explosion that injured more than two dozen people and displaced residents for years, as well as a shooting in which an off-duty LAPD officer killed a mentally disabled man in another county.

LAist examined city checkbook data, made available online by the city controller’s office, to analyze all payments made for liability claims since fiscal year 2018.

Here’s what we found:

• The most recent yearly budget set aside $87 million to handle such payouts, an amount that has hardly changed in eight years.
• The city was over budget just two months into this fiscal year.
• Last fiscal year, payouts exceeded the budget within seven months.
  

Why it matters

This is the second year in a row the city’s overall budget has faced financial headwinds. Last year, for the first time since the peak of the COVID-19 pandemic, overspending and low revenue led to the city’s reserve funds falling below minimum levels required by city policy. This winter, legal settlements and deferred maintenance costs drove up the city’s spending further, and those costs have continued to rise.

When the city overspends on liability payouts, money is taken from other funds, such as the general fund and reserve accounts, to cover those costs.

Making those transfers has larger implications:

• City policy is to maintain reserve funds of at least 5% of budgeted general fund receipts, and if the reserve fund goes below 2.75%, the City Council must vote and declare an “urgent economic necessity” to use the remaining funds from the Emergency Reserve Account.
• Currently, the city’s reserve fund is at 3.28%, a level Szabo described this month as “dangerously close” to emergency levels.
• If additional cost-saving measures aren’t taken, using the reserves to solve remaining overspending would reduce levels to 2.22%.

What we know about liability claims

The Los Angeles Police Department has the highest liability payouts of any city department, with $100 million in claims in fiscal year 2024, according to an LAist analysis of city checkbook data. The department with the next highest amount in payouts was public works, with $45 million in claims across the street services, sanitation and engineering bureaus.

An additional $106 million in fiscal year 2024 liability payouts reviewed by LAist were not associated with any specific department in city data.

“At the end of the day, every dollar that we spend on lawsuits is a dollar that we're not spending on making our neighborhoods safer,” Councilmember Katy Yaroslavsky, chair of the Budget and Finance Committee, told LAist. “Whether it's LAPD or sidewalks or trip-and-falls, we really have to get ahead of the problem instead of paying for it much bigger on the back end.”

Yaroslavsky said the city needs to do more realistic and transparent budgeting while addressing the root causes of liability payouts. She said the city is “focused on solutions that reduce risk, improve public safety and protect city resources.” When it comes to the Police Department, Yaroslavsky said reforms include expanding the use of alternative response teams for mental health crises, as well as improving training and accountability practices.

City Controller Kenneth Mejia also shared concerns with LAist about addressing the root issues that lead to liability payouts, saying that if current trends continue, decreases in revenue combined with overspending could extend a citywide hiring freeze and cause service reductions. The city began its hiring freeze in January 2024, followed by cuts to over 1,700 positions last July, according to the controller’s office.

“This is the second year in a row where we budgeted high revenue amounts, and we're not reaching that amount,” Mejia said. “The city really needs to budget better, more conservatively and more realistically.”

L.A. Mayor Karen Bass, who proposes and signs the budget, did not respond to requests for comment.

Details of the payouts

The following accounts of the city's largest liability payments from fiscal year 2024 are based on court and federal documents. 

United States ex rel. Mei Ling v. City of L.A. — $38,659,715.21

A settlement was reached between the city and Mei Ling after what she claims was years of discrimination because of her disability, preventing her from finding affordable, accessible housing.

Tammy Murillo v. City of Los Angeles, et al. — $25,097,461.25

A district court jury found the city and two police officers liable for excessive force and battery, civil rights violations and negligence in the killing of Jesse Murillo, who was a 32-year-old Navy veteran.

Ismael Soto Luna v. City of Los Angeles, et al. — $10,500,000 (An additional $10,500,000 was paid in 2025.)

A settlement was reached between the city and Ismael Soto Luna after an L.A. County jury found the city liable for a streetlight in dangerous condition causing harm to Soto. The jury also found that this risk was foreseeable by the city, and the city had enough time to protect against such an incident.

Ruben Martinez et al v. City of Los Angeles et al — $8,000,000

A settlement was reached between the city and Ruben Martinez after prosecutors agreed that Martinez was wrongfully imprisoned for 12 years for five robberies.

Malcolm Thomas v. City of Los Angeles, et al. — $7,885,000

A settlement was reached between the city and Malcolm Thomas after what he claims was discrimination based on disability and retaliation while he served as a police officer and instructor at the Los Angeles Police Academy.

And here are the notable payments so far in 2025.

BD Impotex, LLC v. City of Los Angeles — $20,000,000

A settlement was reached between the city and residents of South L.A. after the detonation of illegal fireworks by the LAPD bomb squad. The explosion injured 27 people, including 18 civilians, and caused severe damage to homes and vehicles, according to a federal Bureau of Alcohol, Tobacco, Firearms and Explosives report, causing some residents to be displaced.

Paula French, et al. v. City of Los Angeles, et al. — $17,700,000

A district court jury found that the city was liable for use of excessive force by an LAPD officer that caused the death of a mentally disabled man outside of a Costco in Corona and severely injured his parents.

How does approving the budget work?

Most city budget negotiations happen behind closed doors. Starting in the early fall, the L.A. mayor works with city department heads to figure out what the budget should look like. The mayor outlines her priorities, and department heads submit specific requests for consideration.

The mayor releases the official budget proposal in April. Then the City Council’s budget committee holds a series of hearings to discuss the proposal and listen to feedback from the public. The committee submits recommendations for changes.

The full City Council then has to vote on the proposed budget and the recommended changes. The approved budget takes effect on July 1, running through June 30 of the following year — this is what’s known as a “fiscal year.” Each fiscal year is referred to based on the year the budget ends. For example, the current budget year is 2025. It runs from July 1, 2024, to June 30, 2025.

Keep an eye on your local government

The best way to keep tabs on your local government is by attending public meetings for your city council or local boards. Here are a few tips to get you started.

• Find meeting schedules and agendas: City councils usually meet at least twice a month, although larger ones may meet weekly. Committees and boards tend to meet less often, typically once a month. You can find the schedule and meeting agenda on your local government’s website, or posted physically at your local city hall. Find more tips here.
  
• Learn the jargon: Closed session, consent calendars and more! We have definitions for commonly used terms here.
  
• How to give public comment: Every public meeting allows community members to give comment, whether or not it’s about something on the agenda. The meeting agenda will have specific instructions for giving public comment. Review more details here.
  

LAist’s Brianna Lee contributed to this report.

Los Angeles County District Attorney Nathan Hochman promised at a Tuesday night town hall that MacArthur Park will see “amazing progress” in public safety before the 2028 Olympic Games.

Several community members told LAist they have seen crime return to the Los Angeles park after months of joint drug enforcement operations by the Los Angeles Police Department and federal agencies. Those efforts led to dozens of arrests for alleged drug sales in the area.

An LAPD captain attending the town hall confirmed to LAist that the department is aware of renewed safety problems.

Hochman acknowledged those concerns and said the recent operations made progress and created an opportunity for lasting change.

“If we keep this focus and the energy on this area, MacArthur Park, Skid Row and everything in between,” Hochman said, “then we will see amazing progress before the Olympics, and that is actually a promise.”

Hochman previously promised, during a drug enforcement operation on June 4, to have a picnic at the park on Labor Day. Hochman told attendees he kept that promise when he held an event at the park on Sept. 5 with other local and federal law enforcement officials.

As district attorney, Hochman works with law enforcement agencies to prosecute criminal cases in L.A. County. He said that it will take more work from policymakers and community members to remove the open-air drug market that has been entrenched there for decades.

The area is represented by L.A. City Councilmember Eunisses Hernandez, County Supervisor Hilda Solis, state Assemblymember Mark González and state Sen. María Elena Durazo. Staff members from some of those offices, and the mayor’s office, sat in on the town hall organized by the local nonprofit California Rising.

“Feel free to put the fire under the feet of our politicians,” Hochman told about two dozen residents who attended. “All too often it is easy to spend some effort on something and then get distracted and spend some effort somewhere else.”

'Temporary' relief

Some residents and business owners agreed with Hochman that the large-scale drug enforcement operations from March through June made the area feel safer, at least for a while.

“It was temporary, but we got to see, actually, families at the bus stops with their kids — before it wasn't like that,” Elaine Alaniz told LAist Tuesday. “I think it does help us, but on the other hand I still think that we need more help. It's not just a one, two, three-day thing.”

Alaniz lives nearby and is the president of the Westlake North Neighborhood Council, which begins a block northeast of MacArthur Park.

She said she has seen some crime move away from the park and into the surrounding neighborhoods.

Capt. Ben Fernandes, who leads LAPD’s Rampart Division, said the earlier operations were successful, but there have been some setbacks.

“We made a lot of headway in the beginning,” he said. “There are some issues that we've had some repopulation, especially with addicts.”

Fernandes said that the department will continue to arrest people suspected of selling drugs near the park, while connecting people who are addicted with services to help them get sober and off the streets.

A call for community involvement

Hochman and Fernandes each emphasized that making MacArthur Park a safe and welcoming place can’t be done by law enforcement alone.

“My advice: take the park back — it's your park,” Hochman said at the town hall, calling for community organizations to plan regular outings there. “That starts to send a message that the community really cares about this park.”

He asked that performers like Justin Bieber, who played an impromptu set in the park last month, have more events there as well.

Fernandes said people can get involved to change perceptions about MacArthur Park so it's no longer thought of as a place to go to score drugs.

“What we need to do is — we as a community — come together and show [people using drugs] that it's not their place to go,” he said. “That you're going to be there with your children, with your parishioners, with your friends, with your family.”

Inglewood city officials are launching an audit of their financial relationship with SoFi Stadium and claiming the stadium could owe years of ticket taxes, one month after a judge voided the 2015 contract that brought the stadium to Inglewood. 

The Inglewood City Council voted unanimously Tuesday to commission the audit. Mayor James Butts said the move is a necessary next step after the court ruling, which threw the terms of the financial relationship between the city and Hollywood Park stadium development into question. 

Millions of dollars are at stake for both the city and the stadium businesses. City officials say that the ruling means a cap that limited the amount of admissions tax that Inglewood could collect no longer applies. They also plan to investigate the authenticity of $376 million worth of infrastructure bills Hollywood Park claims the city owes. The findings of the audit could also factor into discussions of how the city will address its current $30.8 million deficit.

The City Council motion — put forward by Butts and co-sponsored by Councilmember Dionne Faulk — requires the city attorney to retain an accounting firm to conduct the audit and report back to the public on its findings within 30 days. It set aside $325,000 from the city’s General Fund to pay for the audit. You can read the city’s full explanation of the audit here.

Butts, who was at the city’s helm a decade ago when developer Stan Kroenke brought his Hollywood Park pitch to Inglewood, said city officials built what they thought was a partnership with their stadium counterparts.

But that partnership has crumbled. Since last summer, the city and stadiums have been slugging it out in a complex series of court cases over the stadium’s contract and Inglewood’s network of video billboards. The conflict has spilled over into the Nov. 3 election via ballot measures that would change the city’s commercial advertising and ticket tax rules. 

The audit approved by the City Council on Tuesday will dig into the entire financial relationship between the stadium and city since 2015, unpacking what is owed and what was received from taxes on everything from tickets to parking. City officials plan to continue auditing the taxes on a quarterly basis into the future.

Still, it’s not guaranteed the city would be able to force the stadium development to pay any debt the audit does claim. Hollywood Park could still appeal the court ruling that voided its contract with Inglewood, while Butts said the city wants to negotiate a new contract to replace it. 

A Hollywood Park spokesperson said the stadium development has lived up to its financial obligations, including paying all of its taxes.

“This is yet another thinly veiled attempt to distract from scrutiny surrounding the City’s own fiscal mismanagement and the questionable actions of its Mayor,” the spokesperson wrote in a statement.

Some locals at Tuesday’s meeting said during public comments they were baffled why the city hadn’t set up an audit process earlier.

“We have needed an audit from day one. We can’t sit here and claim we didn’t know or have an inkling what we were doing with Hollywood Park,” Diane Sambrano said. 

Exterior of Sofi Stadium in Inglewood

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Gary Coronado

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The LA Local

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Speaking during the meeting, Butts said the audit was triggered because of the void left by the development agreement and because major events including the 2027 Super Bowl and 2028 Olympics are about to hit Inglewood.

The mayor first claimed the development agreement was illegal in a letter written directly to Stan Kroenke last year, saying the city’s lawyers made the determination while researching billboard litigation.

Millions in tax revenue at stake

After the judge ruled in agreement with the city, Butts told The LA Local that city officials were still researching the specific implications of the court’s ruling. In Tuesday’s council motion, city staff highlighted what they say is one major change they’ve discovered: There’s no longer a limit on how much admissions tax the city can collect.  

Inglewood collects a 10% tax on tickets sold at SoFi Stadium, but the 2015 initiative that brought the stadium to the city put a cap on that revenue, starting at $15 million a year and increasing annually with inflation. 

The admissions tax cap also happens to be the subject of the current ballot Measure AT. WOW Media, the billboard operator allied with the city in its dispute with the stadium, is funding a campaign in favor of the initiative.

Admissions tax has been a sizable revenue stream for the city — bringing in an average $20 million a year since SoFi Stadium opened — but city officials have said it could be significantly bigger. A city analysis of Measure AT estimated that getting rid of the cap could bring in as much as an extra $50 million in future years. The city did not estimate how much admissions tax revenue it has missed out on while the development agreement was in effect.

The Inglewood audit seeks to clarify basic questions about how taxes are assessed on ticket sales and whether those taxes are actually forwarded to the city. Officials say it will provide transparency about ticket sales, pricing and fees, which have been heavily scrutinized in recent years across the state. 

Gray gets support on proposal for future billboard revenue audit

Councilmember Gloria Gray attempted to amend the audit motion Tuesday, asking the city manager to also audit the revenue the city gets from billboard fees.

“I believe the same standard of financial transparency should apply to every city agreement,” Gray said.

Though her motion didn’t receive a second, Councilmember Eloy Morales said he’d support putting a billboard revenue audit on the council’s agenda in the future. 

“I think we all support all those audits,” Morales said. 

Gray’s move was a rarity for a council that seldom debates motions during public meetings and almost always votes unanimously. The councilmember is currently running for mayor against Butts.

Inglewood pulls in as much as $8 million a year from billboards, according to budget records. Much of that comes from a series of deals the city cut with WOW Media, allowing the billboard company to construct and operate the billboards on public medians and sidewalks. In return, WOW gives the city a cut of ad revenue along with other concessions.

The post Inglewood is investigating if SoFi Stadium owes years’ worth of ticket taxes appeared first on LA Local.