good morning. Welcome to LA on the Record, City Hall’s newsletter. Dakota Smith and David Zahnizer bring you local political news.

The city of Los Angeles is overspending and depleting its reserve funds.

According to one source, city officials exceeded their budget by at least $215 million for the fiscal year that began July 1. new analysis. A big part of that is the high settlements and court rulings associated with lawsuits against the city.

The city is now proposing to borrow money to cover the costs of paying the lawsuit. While this will provide some short-term relief, it will ultimately add to the city’s debt.

At Wednesday’s committee meeting, council members announced that through a “judgment obligation bond,” which would cover payments for legal issues such as negligence or misconduct by LAPD officers, accidents caused by buckled sidewalks, and discrimination lawsuits by police officers. It laid the groundwork for borrowing at least $80 million. City workers.

“We need to take that step to essentially stop the bleeding,” a city administrator said. Matt Szaboadvises the Mayor and Council on the budget.

The city periodically issues bonds to pay for physical assets, such as major building upgrades. However, it is generally not advisable to borrow money to pay for ongoing legal costs due to interest charges.

Based on current interest rates, it could cost the city as much as $20 million in interest to borrow $80 million.

(With this $20 million in mind, the city’s Department of Cultural Affairs’ full-year budget is $18.6 million.)

The bond proposal is expected to carry an interest rate of 2.73% and still requires council approval.

If the plan goes ahead, the city would use its contingency fund (a bucket of money for financial crisis) to pay for the lawsuit, then repay the contingency fund with a loan.

Member of Parliament tracy parkThe budget committee member expressed regret at the idea of ​​borrowing money to pay bills.

“I don’t like debt financing,” she said. “And when you don’t get the product at the end of the day, you like it even less.”

Park serves on the three-member claims committee that reviews lawsuits against the city. She said she was upset to see the same issues, such as damaged sidewalks, end up in lawsuits.

“We sit down and go through binders of repeating fact patterns. The same questions keep coming back,” she said.

city ​​controller Kenneth Mejia He harshly criticized the borrowing strategy this week, saying interest costs would hamper efforts to finance future projects.

“It makes sense to borrow money as part of a comprehensive strategic plan to restore the city’s fiscal balance,” he said. “It is short-sighted, reckless and irresponsible to borrow money and postpone the budget count date.”

The last time the City Council issued a judgment bond was in 2010, when the city borrowed more than $53 million to pay for legal settlements, including the 2007 “May Day brawl” in which the city borrowed more than $53 million. They included one after protesters and media were injured by police at MacArthur. park.

The council also considered borrowing $60 million in 2017 to cover the cost of large legal payments. City controller at the time Ron Galperin pushed back on the idea, but the city council ultimately abandoned it.

The city council also considered borrowing money to pay ongoing bills in 2020, when COVID-19 disrupted the economy and reduced tax revenue from hotels and other sources. The city received relief after President Joe Biden signed a relief package that sends more than $1 billion.

At Wednesday’s meeting, Szabo also said he is asking the council to identify budget cuts for this year across city departments to replenish the city’s reserve fund.

Whoever wins Tuesday’s City Council election (there are three races on the ballot) will likely have to face budget-cutting decisions.

In the coming months, city councilors will also have to decide whether to move forward with renovating the city’s convention center in time for the 2028 Olympics.

And if donald trump If he wins on Nov. 5, he could try to block some government funding to Los Angeles, as he did the last time he was president.

Zach SeidlMayor’s Press Secretary Karen Basssaid the city’s ongoing efforts “continue to stabilize the city’s financial base.” He did not mention the proposed bonds.

“Despite the fiscal headwinds hitting the nation, homelessness is down, Los Angeles Police Department claims are up, and essential city workers are being paid a fairer wage,” he said. said.

State of play

— Almost there: There are just a few days left until Tuesday’s election, which will see three municipal races and eight city and county votes. The next few days or weeks? — Waiting for results. The LA Times Voter Guide can be found here to find your early voting spot here. In Los Angeles, most of the noise comes from City Council District 14, where tenant rights lawyers belong. Isabel Jurado trying to dismiss a member of parliament kevin de leon.

— It’s hard to say sorry: The question of when and how to apologize has been a recurring theme in the Jurado vs. de Leon contest. First was De Leon and the racist audio leak that upended City Hall in 2022. Next was Jurado and the recent “F-Police” controversy.

— Police presence: Law enforcement spending and the concept of police abolition have been divisive issues in the De León v. Jurado race and in Congressional races among former state legislators. Adolin Nazarian and small business owners Jillian Burgos. The police union supports Mr. Nazarian and Mr. de Leon. The Democratic Socialist Party of America, known for including an abolition question in its candidate questionnaire, supports Burgos and Jurado.

— De Leon Contribution: The state Fair Political Practices Commission is investigating donations to de Leon’s re-election campaign from a nonprofit that distributes food to needy residents in his district. De Leon’s camp denies any wrongdoing. Meanwhile, Jurado’s supporters have attacked de León over the campaign’s decision to hire the activist. Najee Ali. In her application for a restraining order, which was granted by a judge, the woman alleged that Mr. Ali harassed, bullied and threatened her. Ali said he has been the target of a smear campaign.

— make a lot of money: Former Los Angeles County Sheriff Jim McDonnell Recently tapped by the Mayor Karen Bass The city’s next police chief could earn more than $507,000 a year, according to a proposal being considered by the Police Commission. The City Council is scheduled to consider his nomination on Friday.

— Expensive ethics? The county’s plan to create a new ethics enforcement agency could cost nearly $22 million a year and add up to 93 new public officials, according to a new report. The discovery drew envy from some in city hall. “Wow, that’s an amazing staff.” david tristanThe city’s Ethics Commission chairman has an annual budget of $6.3 million and employs about 45 people. “I would appreciate it if you could give me a budget like that.”

— Rentals and renovations: The City Council has taken a step toward eliminating a rule that allows landlords to evict renters when they make major renovations to their buildings. The vote was 11-0, and council members directed the city attorney to draft an ordinance to remove the alteration clause. The next day, an ordinance was approved strengthening the city’s anti-harassment laws to protect renters.

— Probe under contract: Los Angeles County officials rarely suspend problem contractors and don’t always explain why they awarded “no-bid” contracts, according to a multiyear investigation following the indictment of a former supervisor. It turns out mark ridley thomas. But the investigation also found that the county’s contracts were not tainted by widespread fraud.

— Dancing Da: Distance atty. Georges GasconHe’s lagging in the polls and struggling to keep his job. dancing on instagram recite a pop star’s lyrics olivia rodrigo — all in hopes of changing the tide with the Nov. 5 election. The Times covered his four-year term in the DA’s office and his struggle to stay on for four more years.

— Shuffle with DWP: D.W.P. Aram BenjaminThe utility’s chief operating officer said in an email to staff that he would resign in January. Earlier this year, it appeared Bass might name Benjamin to lead its utilities division. Instead, she chose Janice Quiñones.

quick hit

• Where is Inside Safe? The Mayor’s program to combat homelessness was implemented in a stretch of Budlong Avenue in South Los Angeles, which is represented by City Council members. marquise harris dawsonAccording to Basu’s team. The initiative also went to 8th and Catalina in Koreatown, where the city council member represents. Heather Hutt.
• Next week’s record: Election is on Tuesday! If you haven’t already, please vote.