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The Los Angeles County government is facing a budget cut of about $89 million, being added with a fire recovery cost of about $2 billion and a settlement of the biggest sexual abuse case in US history.
To close the budget gap, the county will have to fill hundreds of vacant locations, but layoffs are not expected, county chief executive Fecia Davenport said in a news briefing Monday.
Fire recovery estimates include $1 billion in loss revenue, primarily from property taxes, $1 billion to cover soil testing, debris removal, beach cleaning and other expenses, Davenport said.
The county can reimburse some of these costs from the federal government, but must be before the money. Davenport said it would take years to refund a January fire that devastated Altadena, the Pacific Ocean’s Pallisad and surrounding areas.
LA County announced this month that it planned to pay $4 billion to resolve roughly 7,000 claims of child sexual abuse that occurred in juvenile facilities and foster parents from the 1980s to the 2000s. If approved by the Board of Supervisory Board later this month, it would be the largest sexual abuse claim settlement in US history.
“We knew the cost of the settlement was unprecedented and would have a devastating impact on the budget,” Davenport said in a briefing, and she announced the county’s approximately $48 billion recommended budget next year.
The sexual abuse allegations stem from Congressional Bill 218, a 2020 state law that gave victims of childhood sexual abuse a new window into lawsuits. Thousands of men and women have moved forward saying they were sexually abused as children while in county custody.
Davenport said the county expects to pay hundreds of millions of dollars each year through 2030, and expects it to pay less by 2051. In addition to seizing bonds, the county said it would need to utilize the roughly $1 billion rainy day fund.
“I can’t remember the last time we used our rainy day funds,” she said.
Davenport has seen LA County home sales fall 41% since 2021, putting more pressure on the county budget and relies heavily on property taxes.
In Los Angeles, the top budget official said layoffs were “nearly inevitable,” and said the budget shortfall was attributed to nearly $1 billion in legal payments, which increased wages, weaker than city employees’ expected tax revenues.
Under Davenport’s recommended spending plan, most county departments will make a 3% budget cut, eliminating 310 vacant seats out of the approximately 117,000 budgeted positions across the county. Davenport refused to say whether a layoff would be expected in a future year.
“If you start talking about layoffs early, people get very nervous,” she said. “You’re starting a rumored factory.”
The public works, community planning, the mental health department and the sheriff’s department will be exempt from cutting, according to a county spokesperson.
The Trump administration is further complicating the financial situation in LA County, which receives at least 13% of its budget from the federal government. The county public health department was recently notified of losing about $45 million in federal grants related to Covid-19.
“The federal government’s potential for cutting funds is very realistic and could destabilize the county’s budget,” she said.
According to Davenport, the recommended budget includes $1.1 billion, which recommends that the half-cent sales tax approved by voters in November, and $11.9 million through a measurement G of $11.9 million for county government reform approved by voters last year.
The Committee on Supervisory Board will discuss recommendations on Tuesday, along with the final budget to be adopted in September.
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