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LA WATCHDOG - To help close the $1 billion “budget imbalance” that City needs to overcome in order to balance next year’s budget, Mayor Bass and her entourage visited their fellow politicians in Sacramento to ask for their assistance in arranging for a $1.9 billion bailout. Of course, this assumes the financially challenged State has $1.9 billion to spare.
Under the “Request for $1.893 Billion to Support City of Los Angeles Fire Recovery and Resilience” proposal (see below), the focus is on balancing the budget with the Palisades fire providing the cover story for the real ask.
Part of the overall request is $600 million for Protecting City Services. This includes $250 million for infrastructure (streets, sidewalks, and streetlights), $200 million to pay for liability claims, and $150 million to replenish the depleted Reserve Fund.
These requests would be very helpful in balancing the budget. They are, however, not related to the Palisades fire, are the result of the City’s gross mismanagement of its budget and financial affairs and should not be part of any bailout funding.
Since Bass was elected mayor, she, along with the City Council and its Budget Committee, has entered into budget busting labor agreements, relied on overly optimistic revenue projections to support these unsustainable contracts, severely underestimated liability claims related to legal judgments and settlements, and underfunded public safety and its infrastructure. At the same time, the Reserve Fund has been depleted to a level where the City, if it used honest accounting, would be required to declare a financial emergency.
If the State were to honor the City’s request for the $600 million, it should be accompanied by demands for real reform so Angelenos will not have to endure the pain of another irresponsible financial meltdown.
Our mayor has called for “fundamental change in the way the City budget process operates.” These include numerous proposals to reduce liability costs, to refocus on the City’s most critical services, to reduce departmental contract expenses, to realize payroll and benefit savings, to preserve the Reserve Fund, and to create structural reforms to enable ongoing budget balance in the future.
This may sound good to the political blowhards that occupy City Hall, but this is not a call for real reform. Rather, the State should demand real reform and accountability, following the lead of the Neighborhood Council Budget Advocates, beginning with an honest four year forecast that includes the impact of future labor agreements, a two year budget cycle, open and transparent labor negotiations, a prohibition on entering into budget busting labor agreements, the establishment of real Reserve Fund, the development of comprehensive infrastructure plan, and strict independent oversight of the budget.
The City is also requesting an additional $1.3 billion in bailout funds, some or most of it is related to the Palisades fire. But it requires close scrutiny as the City has proven it cannot be trusted with money, especially when it is OPM (other people’s money).
The State also needs to be very careful in awarding bailout funds. It does not want to be a soft touch as San Francisco, BART (Bay Area Rapid Transit) and other financially stressed entities will be demanding bailouts without strings attached.
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The following is the letter from Assembly Member Tina McKinnon to Assembly Budget Chair Jesse Gabriel and Sub Chair Sharon Quirk Silva:
RE: California State Budget – Request for $1.893 Billion to Support City of Los Angeles Fire Recovery and Resilience
We, the below signed legislators, are writing to respectfully request that the 2025-26 State Budget include the following funding priorities to address the City of Los Angeles’ urgent disaster recovery efforts following the devastating fires this past January, which displaced thousands, destroyed businesses and damaged critical infrastructure.
Protecting City Services Under Budgetary Strain & Addressing Liability Costs – $638M
- Request: Funding to enhance and make access improvements to streets, sidewalks, and streetlights ($250M), to help address an extraordinary spike in liability payouts ($200M), replenish the City’s reserves ($150M) and to make up for lost revenues from the Palisades fire ($38M).
Ensuring the City’s Cash Flow for Recovery during Federal Uncertainty - $301M
- Request: Provide a loan to support disaster recovery expenses pending FEMA reimbursement ($291M, e.g., debris removal, emergency protective measures, repairs to damaged City property) and funding for disaster response contract services ($10M).
Investing in Mitigation and Resilience for City Residents – $750M
- Request: Provide a loan to support upgrades to the electric power grid in Pacific Palisades for resiliency, reliability and capacity ($700M) and funds to incentivize electric upgrades and appliances (e.g., heat pumps, induction cooktops, battery storage) that increase reliability during outages ($40M) and upgrade the Advanced Transportation System and Coordination (ATSAC) traffic signal system ($10M).
Enhancing Fire Safety and Fire Suppression – $56.5M
- Request: Funding for brush fire equipment caches in high fire severity zones ($1.5M), new Fast Response Vehicles/brush control units and accompanying staff for fire suppression ($15M), and to reconstruct the decommissioned Palisades Reservoir to address structural issues ($40M).
Supporting Workers and Residents – $72.8M+
- Request: Funding to operate a One-Stop Rebuilding Center ($12-15M); waive certain permitting fees for property owners to rebuild ($38M+); employ Angelenos to perform fire clean-up, remediation, and other recovery work ($3.8M); provide interim library services and recreation/park activities to the community ($3M); support Disaster Recovery Center operations ($1M); and support displaced renters with emergency housing vouchers ($15M).
Expediting Public Assistance – $75.5M
- Request: Expedite CalOES processing of FEMA Public Assistance from previous emergencies, particularly COVID-19 (Project RoomKey/Non-Congregate Shelter and Continuity of Operations).
These amounts reflect the City’s ongoing need for support in the areas of site cleanup, housing assistance, public safety, infrastructure restoration, and economic support for impacted communities. These investments are essential not only for immediate relief but also for fostering the City’s long-term stability and preparedness.
We appreciate your consideration of these requests and look forward to working with you to secure the necessary resources for our communities impacted by this devastating natural disaster.
Thank you for your attention to this matter.
Signed by 22 Members of Los Angeles County Legislative Delegation.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)
