The LA County government is facing a budget cut of about $89 million, being added with a fire recovery cost of about $2 billion and the biggest sexual abuse settlement in US history.
To fill the budget gap, the county will have to fill hundreds of vacant locations, but layoffs are not expected, county chief executive Fecia Davenport said at a press conference Monday.
Fire recovery estimates include $1 billion in loss revenue, primarily from property taxes, and $1 billion in expenses, including soil testing, debris removal and beach cleanup, 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.
Earlier this month, LA County announced it had planned to pay $4 billion to resolve roughly 7,000 claims of child sexual abuse that occurred in juvenile facilities and inside foster parents from the 1980s to the 2000s. If approved by the Board of Supervisors later this month, it would be the largest sexual abuse settlement in US history.
“We knew the cost of the settlement was unprecedented and would have a devastating impact on the budget,” Davenport said at the briefing, where she announced the recommended budget of approximately $48 billion for the county’s upcoming fiscal 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.
“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.
The highest budget manager in Los Angeles That layoff says It’s “almost inevitable,” with a budget shortfall of about $1 billion, partly due to bulging legal payments, weaker than expected tax revenues, and pay increases for city employees.
Under Davenport’s recommended spending plan, all 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 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. This said Davenport is currently being blocked by a temporary restraining order.
“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 a half-cent sales tax approved by voters last November, and a $1.1 billion spending on homeless services through a $11.9 million measurement G through a $11.9 million measurement G for county government reform approved by voters last year.
The Board of Supervisors will discuss recommendations on Tuesday and adopt the final budget in September.
