LA council OKs budget reduction as city defends LA Fire Department spending

Due to lower-than-anticipated growth in tax revenue and overspending due to labor contracts and liability payouts, the Los Angeles City Council on Tuesday authorized a budget reduction exercise with a focus on personnel.

In a unanimous vote, council members instructed the city administrative officer, chief legislative analyst and Personnel Department to report quarterly on the following, but not limited to:

— An analysis of current staffing levels and the associated cost for staffing levels for each department in comparison to the previous fiscal year

— A current list of each vacant employee position

— A review and analysis, prior to any proposed reductions to departmental appropriations and impacts to services

— Updates on costs related to major long-term construction projects or public works-related infrastructure projects

— Updates on costs related to compliance with federal, state and local law such as the Americans with Disabilities Act and Measure ULA, a 2022 voter-approved tax on transfers of property valued at more than $5 million

The exercise is intended to guide the council’s priorities while maintaining critical city services, according to a motion introduced by council members Tim McOsker, Bob Blumenfield, Hugo Soto-Martinez and Katy Yaroslavsky in October.

Additionally, council members called for two other reports related to the city’s debt obligations and pending settlements.

Such reports would come at a time when the city overspent nearly $300 million, according to city documents. To cover those costs, officials have dipped into the reserve fund — an account meant for fiscal emergencies and to ensure the city remains in operation.

City financial analysts have previously warned the reserve fund has dropped to 4% of revenues and is likely to decrease further. It’s also below the city’s policy of keeping that fund at a minimum of 5%.

The CAO has cautioned that if the fund fell below 2.75%, council members would need a two-third vote to move money from it, and such a low level could lead to consequences for the city’s bond rating.

Part of the overspending has been a result of legal payouts. Los Angeles has allocated $112 million for court judgments and legal settlements for cases involving police officers or negligence, as well as traffic collisions and aging infrastructure.

Legal payouts are expected to balloon to nearly $300 million later in the fiscal year.

Elected officials are crunching departmental budgets and identifying those with excess dollars, as well as considering $80 million in judicial obligation bonds to restore the reserve fund.

The city’s fiscal status has come under scrutiny as a result of the devastating wildfires of the last two weeks.

The city has been criticized for reducing the Los Angeles Fire Department‘s operating budget by about $17 million — according to figures shown in the CAO’s adopted budget document.

However, the fire department’s budget has grown since the city’s overall $12.8 billion spending plan was adopted on July 1, 2024, according to city documents, and is on track to exceed $950 million, though Fire Chief Kristin Crowley has stated the department nonetheless had to scale back some of its duties.

According to a December memo from Crowley, the department’s operating budget for the 2024-25 fiscal year was $819 million, a decrease of about 2% from the $837 million the department received in the 2023-24 fiscal year.

City officials have insisted their spending ultimately will increase the LAFD’s operating budget this fiscal year, and increased the fire department’s overall budget by approximately $53 million.

Additionally, another $76 million is anticipated for the LAFD to cover salary increases as a result of the labor contract approved in November 2024.

According to City Controller Kenneth Mejia’s office, as part of the reduction in the department’s operating budget, 61 civilian positions were eliminated, of which three were “resolution positions,” meaning they were specific to projects with limited duration or funding.

The LAFD is just one department of several that had reductions in its operational budget. During the 2024-25 budget deliberations, elected officials eliminated about 1,700 vacant positions in a bid to address financial concerns.