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.

A high-profile fight between California Attorney General Rob Bonta and Paramount Skydance resolved Monday with a settlement that clears a path for the company to continue with its planned acquisition of another century-old studio, Warner Bros. Discovery.

The deal comes after Paramount threatened to leave the state over an antitrust lawsuit led by Bonta and attorneys general from 11 other states that sought to block the $111 billion merger.

Paramount Chief Executive David Ellison reportedly told senior leaders of the company “clearly we’re not wanted here,” during a meeting in August. However, California has taken several steps since the 2000s to retain studios like Paramount.

The fight was the latest chapter in the battle for Hollywood, which has been a priority for California lawmakers and the last three governors.

Here are some ways the state has tried to keep its storied industry:

• Program 1.0: In 2009, in response to other states beginning to offer financial incentives for motion picture production, Gov. Arnold Schwarzenegger signed the state’s first California Film and Television Production Tax Credit. The program allocated $100 million per year to eligible film and TV production companies through 2017.

• Program 2.0: In 2014, lawmakers approved Assembly Bill 1839, which Gov. Jerry Brown signed into law, creating a new version of the Film and Television Production Tax Credit program and more than tripling the credits to $330 million annually through 2020.

• 2018 expansion: In 2018, Brown again authorized an extension of the program for another five years, through 2025. Following the COVID-19 pandemic that shut down productions, Gov. Gavin Newsom boosted the credit temporarily to $420 million annually.

• 2025 increase: Hollywood was struggling following the “quadruple-whammy” of the COVID-19 pandemic, a writers strike, deadly wildfires and growing production incentives from other states that lured movies out of California. In response, lawmakers increased the yearly credit in 2025 to $750 million per year until 2030. Newsom championed the boost, saying the industry was “on life support.”

• This year, when the film and television production tax credit clashed with an initiative to cap corporate tax breaks, lawmakers carved independent film producers out of the groups subject to a new cap.

• In July, Democratic Assembly Speaker Robert Rivas of Salinas created the “Select Committee on Growing and Retaining the Creative Economy in California” to, in part, keep film and television production in the state.

• On Saturday, Newsom signed Assembly Bill 2319 by Burbank Democrat Nick Schultz to create a new tax credit for post-production work, including editing and visual effects.

Assemblymember Rick Chavez Zbur, a Democrat representing Hollywood, said he was delighted a deal was reached to keep Paramount in California, but that the state needs to do more to retain the industry. Zbur is chair of the state’s new Assembly committee focused on keeping film production in California.

“Now that other states are realizing what important, family-sustaining jobs these are, they're competing very aggressively for these jobs,” he said.

Zbur said the committee will explore new state incentives during its first meeting, which he expects will take place in October in Los Angeles.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

Beginning Jan. 1, 2027, many Medi-Cal enrollees will face new work requirements and eligibility checks — the result of sweeping federal changes that could affect more than 1 million L.A. County residents, according to organizers of a new countywide outreach campaign.

If you are a Medi-Cal enrollee between ages 19 and 64, you may soon need to show you're working, volunteering, going to school or in a job training program for at least 80 hours a month or otherwise earning income to keep your public health insurance coverage.

Some enrollees will also have to prove they’re eligible every six months instead of once a year.

Parents of children 13 and younger, pregnant women, older adults and people with disabilities are largely exempt from the requirements.

What to do to prepare

• Keep your address and phone number current with your county Medi-Cal office.
  
• Watch your mail, and respond promptly to Medi-Cal notices in yellow or white envelopes.
  
• If you're unsure what a notice means, community health centers and trained volunteers can help in person and in multiple languages, county officials said.

How we got here

Nearly 4 million L.A. County residents, or 41% of the population, rely on Medi-Cal — California’s version of Medicaid, a joint federal and state insurance program providing free or low-cost coverage to low-income people.

President Donald Trump, joined by Republican lawmakers, signs the "One, Big Beautiful Bill Act," a massive spending and tax bill, at the South Lawn of the White House in Washington, D.C. on July 4, 2025.

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Samuel Corum

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Getty Images North America

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President Donald Trump signed the “One Big Beautiful Bill” — formally H.R. 1 — in July 2025, and it reduced federal Medicaid funding while adding a requirement that people who receive benefits work or show they are going to school, volunteering or seeking job training.

The new requirements and six-month renewal rules apply to adults 19-64 covered through Medi-Cal’s Affordable Care Act expansion, according to county officials.

In June, the federal Centers for Medicare & Medicaid Services issued the rule that implements the work requirement. CMS said in a news release that the framework is meant to promote economic stability and self-sufficiency.

“This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families,” CMS Administrator Mehmet Oz said in a statement.

Later that month, states including California sued to challenge the changes. In July, a federal judge denied their request to pause the rules while the lawsuit continues.

Last week, L.A. Care Health Plan, which administers Medi-Cal benefits for many county residents and other partners, launched “Keep L.A. Covered,” a public campaign to train community leaders, including pastors, teachers and health workers, to warn Medi-Cal recipients about renewal notices. The first training is Oct. 27, hosted by Maternal Child Health Access.

County officials say people and organizations that want to get involved can sign up at www.keeplacovered.org.

Paperwork hurdles

Campaign leaders say people are more likely to lose coverage because a notice went to an old address or went unanswered than because they stopped qualifying for Medi-Cal.

"One missed notice, one missed deadline, one moment of confusion can mean them losing their coverage, and it's not because they're no longer eligible," Martha Santana-Chin, CEO of L.A. Care, said at a campaign launch last week. "It's simply because they haven't been able to navigate the paperwork that's ahead of them.”

The state of California is already mailing letters about the changes, Santana-Chin said.

If the state can't verify compliance, it must send a noncompliance notice and give the enrollee 30 days to prove compliance or an exemption. Otherwise, the application may be denied, or the person disenrolled.

Advocates say the risk is greatest for people without a stable mailing address. Statewide, most people experiencing homelessness are eligible for or already enrolled in Medi-Cal, according to the California Health Care Foundation.

The 2026 Los Angeles Homeless Services Authority homeless count estimated more than 73,000 people were experiencing homelessness in L.A. County. Many would qualify for medical exemptions that would allow them to receive Medi-Cal benefits without proof of work or other requirements, but claiming an exemption requires clinical documentation and regular contact with the healthcare system, the foundation said. Federal guidance doesn't let states exempt people from the requirements solely for being unhoused.

Some details of the 80-hour monthly work requirement remain unsettled. The federal government is still writing the details on what counts as qualifying work, volunteering or education, Santana-Chin said.

The Centers for Medicare and Medicaid Services projects the requirement will reduce Medicaid enrollment nationwide by more than 3 million people. The federal agency assumes about 15% of enrollees will lose coverage, about 9% because they don't meet the requirement and about 6% because of paperwork or other administrative barriers. The actual effect depends on how states carry out the rules, according to a recent report from the federal agency.

The Congressional Budget Office, which analyzed the law using different methods, estimated the requirement would leave 5.3 million more people uninsured in 2034.

Facing growing public backlash and a pivot from his own past vetoes, Gov. Gavin Newsom signed a sweeping package of seven bills on Monday that aim to force the data center industry to pay its own way in California.

Three of the new laws shift electric infrastructure costs away from residential customers and toward data center operators, three more mandate disclosures of water usage and other resources, and the last one makes data centers ineligible for environmental review exemptions.

Newsom, in a written statement, contrasted the new regulations with President Donald Trump’s hands-off approach to data centers and artificial intelligence.

“We know that we don’t have to sell out Californians or sacrifice our well-being to innovate and succeed,” the statement read. “California has proven that time and time again. With these laws, we are ensuring that Californians remain in the driver’s seat — and that those profiting from data centers aren’t doing so at our expense.”

Trump has aggressively pushed to accelerate data center development nationwide, arguing that they represent a significant economic opportunity for states that embrace them. He said last week at the All-In Summit, an invite-only conference for business leaders, that the industry is the “oil of the next 20, 25 years.”

Newsom’s signature on the new laws represents a significant departure from his actions on data centers last year, when he vetoed a water disclosure bill over concerns that regulation could stifle AI growth and signed into law only a single stripped-down environmental study bill.

Environmental advocates and the lawmakers behind this year’s bills previously told CalMatters that intensifying public backlash to data center construction propelled the legislation this year, despite a flood of lobbying funds from Big Tech and other business interests that aimed to soften the proposals.

“When you’re looking down the barrel of public outcry that says we don’t want [data centers] at all, and you’ve got localities that are saying they’re going to ban them, then you know the atmosphere has changed,” Assemblymember Diane Papan, a San Mateo Democrat who authored two of the bills which were signed into law on Monday, previously told CalMatters.

Other state legislatures as well as Congress are also advancing new measures to regulate the industry. In May, a Gallup poll found seven in 10 Americans oppose data center construction in their communities, while a July Public Policy Institute of California poll found similar opposition statewide. Hundreds of cities nationwide — including Monterey Park and Bay Area cities like Pittsburg — have either passed data center bans or walked back approvals following public outcry.

Arnab Pal, the executive director of Deploy Action, a nonprofit that promotes clean energy, told CalMatters the new laws are a good step toward preventing data centers from harming consumers through utility rate increases or environmental damage. Still, Pal said, more can be done to ensure such projects actually benefit everyday people through advancements to the electrical grid and the acceleration of clean energy infrastructure.

“I don't think these bills are the end of this fight; I think we're gonna have to do a lot of implementation on the back end and, as other states roll out their policies next year, I think California is going to look back and be like, ‘maybe we should have done more,’” Pal said. “I'm interested to see what we do next year on this.”

Business interests that oppose the measures, like the Data Center Coalition — which counts companies like Google, Microsoft and OpenAI among its members — warn that further regulation could push the data center industry out of California. According to the latest figures from the Data Center Coalition, the industry contributed 665,500 jobs, more than $159 billion in economic activity, and $14.1 billion in federal, state, and local taxes in California in 2024.

Khara Boender, the director of government affairs west for the Data Center Coalition, told CalMatters that “the data center industry shares the goal of ensuring growth of this critical infrastructure is responsible and well managed,” but more work needs to be done “to promote responsible data center growth while maintaining California as a key, competitive market in the global economy.”

Newsom signed the following bills:

• Senate Bill 1168, SB 886 and Assembly Bill 2383, which shift electric infrastructure costs away from residential customers and toward data center operators
• AB 2469, AB 1577 and AB 2619, which mandate disclosures or estimates of water usage and other resources
• SB 887, which makes data centers ineligible for blanket environmental review exemptions, and offers fast-tracked approval for facilities that meet state standards for water and energy conservation

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.

Gov. Gavin Newsom has signed a pair of bills that will create a new system for approving community college bachelor’s degrees.

Senate Bill 960 and Assembly Bill 2694, which were sent to Newsom as a two-bill package, will let community college districts create between two and 12 new bachelor’s degrees to fill local workforce needs.

The bills take effect Jan. 1, 2028, and will create a five-tiered system determining how many bachelor’s degrees each district can offer. Districts will be placed into tiers based on the percentage of students who complete a degree or certificate or transfer to a four-year university. Districts with higher graduation and transfer rates will be allowed to create more bachelor’s degrees — up to the maximum of 12.

The tiered system, which was among several last-minute amendments to the legislation, has drawn backlash from community college presidents and chancellors, who say the system will pit colleges against one another.

However, the legislation does make at least one significant change supported by the community colleges: It only prohibits degrees that duplicate CSU programs offered in the same local service area as the community college proposing the degree. In the past, duplication wasn’t tied to location, and community colleges sometimes faced duplication objections from CSU campuses located in different regions of the state.

The legislation also allows for certain circumstances when community colleges can create bachelor’s degrees even if a nearby CSU campus has a similar program. That will be permitted if the CSU program has had a transfer acceptance rate of less than 75% for three consecutive years.