🐦 The LA Reporter, Issue 19: A playbook for getting LA city's finances out of the red

LA city’s mail room has run out of money and can no longer send out required notices to inform tenants of their rights.

Officers who direct traffic during signal outages and emergencies are being pulled off the street.

And the City Clerk has proposed suspending elections for the city’s 99 neighborhood councils, a system that offers a way for people to participate in local government at the grassroots.

It’s become harder and harder to hide the signs that the seams of LA city’s finances are ripping, and that some urgent mending is needed. 

But last Wednesday, on March 25, 2026, the city’s top financial adviser, presenting a sobering picture about LA’s budget, warned the LA City Council that recovering from LA’s fiscal crisis won’t be easy nor fast.

“This is not the year to expect restorations of services,” City Administrative Officer Matt Szabo told city leaders. They will be hearing “incredibly compelling arguments for staff and funding restorations, and those arguments will be justified,” he said. “Some of our departments have been diminished to the point where they are not able to deliver the basics effectively … and there are serious risks emerging.”

“They will not be wrong,” Szabo said. “But they are asking for funding that we simply do not have at this point.”

This is not an unexpected status report — but Szabo was not just there to present a dire picture of LA’s fiscal outlook, in which a $263 million shortfall is being anticipated. (That gap includes a $91 million amount already anticipated in their four-year outlook that’s now compounded by an added $25 million to hire more police, $30 million cost due to the city waiving fees for Palisades fire recovery, and the City Controller projecting a $117 million lower revenue amount in the next year. Szabo told the council that the CAO’s own revenue estimate out next month will likely be close to that of the controller’s.)

In fact, Szabo devoted the bulk of his presentation and energy to offering up a possible playbook for city leaders to follow for improving LA city’s financial condition. This serious talk, he said, was spurred by the fact that the city’s “credit score” is worsening even as the city moves ahead with a $2.6 billion renovation and expansion of the LA Convention Center project.

Maintaining a good bond rating would be important in any year, Szabo said, but the city’s rating is now “more critical than ever” as they prepare to issue $1.8 billion in debt in October to pay for modernizing and expanding the Los Angeles Convention Center (City staff has been instructed to produce a monthly report on the expansion project, which was approved last year despite concerns about the city’s ability to keep their budget intact as they try to keep up with an aggressive, “Olympics-driven deadline.” The first progress report was released earlier this month.)

On Wednesday, Szabo provided a series of ideas for keeping a tighter fiscal ship in order to restore the public’s, and borrowers’, confidence in Los Angeles, and to save money on interest. Some of the methods he recommended include building back a 10% reserve, reducing liabilities, doing budget planning every two years rather than annually, and sharing more information to the council and the public about labor contract negotiations. You can view Szabo’s full presentation here (also, the slides).

The more novel ideas include opening up labor negotiations to more eyes. That could look like releasing the labor contract proposals from both management and city employee bargaining units to more members of the City Council, and in turn, potentially getting more information about those proposals to the public. Analyses of the “multi-year impacts” of those proposals could also be released.

Typically such labor contract proposals don’t get disclosed widely, and most city leaders (who aren’t the mayor and council leadership) aren’t privy to them until an agreement has been reached, with the “completed contracts dumped in your lap with only one option being, you vote yes or you vote no,” Szabo said.

Szabo also said that this idea is just that, for now, since they still need to work with city worker labor unions on this idea. (FYI, contracts with the Los Angeles Police Protective League, which represents more than 8,000 rank-and-file police officers, and the Engineering & Architects Association that represents more than 6,000 employees, many of whom are analysts and planners, are expiring in 2027. The contract with the firefighters union, United Firefighters of Los Angeles, IAFF Local 112, representing more than 3,600 workers, expires in 2028.)

Szabo also gave an overview of possible ways to rein in ballooning liability costs — much of which stem from dangerous conditions or trip and fall cases (including those that are due to broken sidewalks), as well as excessive force, civil rights and employment cases originating from the Los Angeles Police Department.

One of those liability mitigation ideas is to have the departments be held accountable for liability costs. In a report last Friday, the CAO and City Attorney’s Office recommended looking into a variety of ideas to reduce liability, including one that would set aside funding within each department to pay for liability costs. If the department overspends on that liability budget, the consequence would be that funding for the department’s services would be affected. But if the department reduces its liability costs, the surplus from that could be used to pay for services in that department. (Szabo told The LA Reporter that this “could be one model for the council to consider” and that the report calls for looking into “these options further before recommending a final policy on departmental accountability.”)

In addition to some of the fancier ideas being floated, which also include moving to a longer timeline for planning the city’s budget (as opposed to an annual planning cycle that gives leaders less time to assess the outcomes of their budget decisions), Szabo also gave a pretty simple piece of advice that should be a familiar concept to most people, for how to fix LA’s budgeting woes, which is: 

“Adopt a budget and stick to it.”

Last December, LAPD officials went to the Los Angeles City Council to request more money, above what was originally budgeted this year, to hire 410 police officers. At the time, there wasn’t any funding identified to cover most of that request, and the council only approved a small increase of 40 officers. This was a rejection of a proposal by LA Mayor Karen Bass to hire additional police officers, and she issued a statement criticizing the council’s decision as “disappointing and shortsighted.” 

That funding request had come after LA City Council members had learned a month prior, through a financial update in late October, that LAPD officials had gone ahead with spending above what city leaders had agreed to in the adopted budget. This all happened as LA City Council members were trying to find ways to reduce the number of city employees, more than 1,600 people at the start of this fiscal year (beginning last July 1, 2025), who faced imminent layoffs this year. So this news that LAPD officials had gone ahead with spending un-budgeted dollars angered some members of the City Council at the time, including Tim McOsker, who coincidentally had once lobbied on behalf of the police officers’ union. “We have to be grown-ups here,” McOsker said at the time. “Every dollar has 100 pennies, and the budget has to mean something.” 

After the December council vote denying much of their funding request, LAPD officials came back in January to try again. This time they said they had found some savings, from an accumulated overtime account, to cover the cost of hiring more police than had been budgeted. The council approved $2.6 million in additional funds to hire police, up to 410 officers. The move is expected to lead to an added $25 million in police officers costs next fiscal year. This time, Mayor Bass reacted with a statement calling this a ”critical investment” that nevertheless was not enough. “There is more work to do to invest in the safety of Angelenos,” Bass’s statement said.

At that Jan. 21, 2026 meeting where the council approved additional police hiring, two council members had also introduced a motion to transfer the financial auditing duties of the police department to the City Controller’s Office. When that motion was later taken up in committee in February, one of the authors, Hugo Soto-Martinez, explained that the proposal was in response to a lack of clarity on LAPD funding.

He said the funds that had eventually been identified to pay for the added police hiring had been “previously unreported,” and he said that in his opinion, “the Los Angeles Police Department is one of our largest investment, yet it seems to be one of the least transparent facets of our government.”

A version of that proposal advanced last Tuesday. The original motion, which Soto-Martinez authored with Council member Eunisses Herhandez, had called for the creation of a “bureau of police oversight.” It was amended in another committee in March, by Council member Monica Rodriguez, to instead call for a report back on the proposal to create the bureau. 

City Controller Kenneth Mejia, whose office would be taking up the proposed auditing duties, shared news of this idea having moved forward, via social media, after also putting a teaser out about it days before. 

Mejia described the police oversight bureau as something that would be “huge” if it were to go through, with the LAPD’s budget amounting to around “$3.4 billion each year, when you also include liability payouts, and … they take up close to half of the city's discretionary funds, which are funds that could be spent on anything.”

He said the proposal calls for adding auditors to his short-staffed, but in-demand department, and that his office will now be preparing a report to “let the council know what this would look like.” The motion that advanced calls for hiring auditors and investigators to form this bureau, which would be housed within the Controller’s audit services division.

Three of the 14 Los Angeles mayoral candidates — City Council member Nithya Raman, Mayor Karen Bass and tech entrepreneur Adam Miller — took part in the Pacific Palisades Democratic Club mayoral candidate forum on Sunday. Here are a few interesting takeaways from those conversations with the Dems:

‘Worker Bee’ Nithya Raman: Raman, an LA City Council member since 2020 who now heads up the Housing and Homelessness Committee, pointed to witnessing “politically motivated decisions” being made at City Hall as driving her to run against her former ally, Mayor Karen Bass.

“I think many of you can feel it on the streets, my city feels rudderless,” Raman told members of the Democratic club. She pointed to efforts to keep film industry jobs in Los Angeles and address the city’s housing crisis as some of the areas where “we are making bad decisions, politically motivated decisions, often, that lead us in(to) fiscal crisis. We've made multiple decisions over the past couple of years that have left us as a city, fiscally devastated … it has left us with a billion-dollar budget deficit that has led us to cut everything from 911 call-takers to people who fix potholes and streetlights, and it's left us less capable to serve you, the residents of the Palisades, to do things that will support recovery, like waiving building and permit fees easily.” She said she wanted to “fight for a different future for a city that, I love so much, so deeply, at what I think is such an important moment for LA. I've delivered for my constituents because I work hard and because I'm not in politics for the long term. I'm just a worker bee.”

Raman, who describes herself as an urban planner by trade, recently released a “housing for all” platform on her website that went into unusually fine detail (for a campaign) about how she would “triple” annual housing production in Los Angeles, winning her plenty of good feedback from YIMBY advocacy groups that tend to take a wonkish lens to City Hall.

Karen Bass says she ‘cracked the code’ on police hiring, will soon chair the Metro board: Bass, a former member of Congress who had once described “Defund the Police” as “one of the worst slogans ever,” told members the Democratic club that one of the top two commitments she made upon getting elected to her first term as mayor was to increase the size of the police department. Bass says that “it has taken me a couple of years to crack the code as to why it was so difficult to hire police” but she says she’s now done it. “We finally cracked the code,” she said. To do this, Bass said, she has “had to change leadership in a number of our city departments.” Bass said she did this in 12 of the city departments, “but I have not done it in the news — in other words, in respecting people's tenure and allowed them to retire respectfully.” Bass also talked up her executive order she signed last week that directs the Bureau of Street Lighting to come to an agreement with the LADWP (a proprietary department) for installing and repairing 60,000 new streetlights by using solar panels, which reduces the city’s reliance on copper wire that has been prone to theft, to power the illumination. It’s meant to reduce the backlog on streetlight repair, which typically takes months to get to, for the city (it’s a separate initiative from the $65 million “solar surge” effort that the City Council also approved last week to install the solar panels into streetlights). 

Bass also told the Democratic club members she will become chair of the Metro board in a couple of months. She mentioned this in the context of an answer to a question about SB 79, which calls for increasing density around public transit. Bass is not a fan of that bill and has publicly opposed the now passed SB 79, including calling on Gov. Gavin Newsom to veto it. Meanwhile, the Metro Board recently approved the K Line northern extension route, which would run through Mid-City neighborhoods where there has been community opposition. Bass sides with that opposition, but drew back on a planned motion that called for longer delays on the project, during a Metro board vote on the line held last Thursday. She had instead agreed to a compromise in which the Mid-City portion would undergo another year of additional study, while not holding up the process for West Hollywood and LA County to put together the financing needed to cover the cost of building the rail extension, supplementing the amount that had already been allotted to it under Measure M. In the meeting with the Democratic club, Bass drew a connection between SB 79 and that K Line project. The K Line project, she said, “isn't supposed to begin until 2041. Anything could happen.” Keeping with the typical reluctance to increase density, the Los Angeles City Council, which last fall approved a resolution opposing SB 79, followed up last week with a vote delay the fully implementation of the bill’s provisions until 2030. The council opted to delay implementing increasing density around rail lines until that later date, by opting to do some lighter up-zoning (increase of density) to four stories in some single-family neighborhoods.

Adam Miller is a Democratic donor turned mayoral candidate: Adam Miller is a Brentwood resident who described himself at Sunday’s forum as a lifelong Democrat who has been actively engaged in the party for quite some time. He said he has been involved “really since I was 16.” When he found success as a business person, Miller said, he became a donor to the campaigns of many a Democratic candidate running for state and national seats(he gave $10,000 to Gavin Newsom in 2018, according to the state Secretary of State website). He continues to donate, including to the campaign of someone who is now running for governor, and who is likely to win, he said. (The state Secretary of State website shows a person named Adam Miller donating a five-figure sum to the gubernatorial campaign of Eric Swalwell.) In local races, Miller has also donated to the campaigns of former Mayor Eric Garcetti, and his now opponent Karen Bass.

What has funded Miller’s contributions to Democratic party politics has been his business success from running Cornerstone OnDemand, a widely used human resources training software company that he told the Dem club was started out of his apartment. While he did not share this detail in the forum on Sunday, Miller’s company, which he took private and sold in 2021, has had several contracts with the city of Los Angeles, serving as the online training tool for the Personnel Department, the Neighborhood Councils and LADWP.

Meanwhile, Miller’s company has gotten several write-ups through the years in the business pages of the LA Times, through stories about his software company. His subsequent philanthropic ventures under 1P and Better Angels, one of many efforts out there saying they are tackling LA’s homelessness crisis, has also been featured in the paper. In just the last few months, even though he has a low name recognition that he is trying to expand through a paid ad he’s airing, Miller has since jumped to that newspaper’s politics pages, getting consistent coverage and mention there ever since. Miller has also gotten accepted to candidate speaking engagements and the first mayoral debate of the primary election.

Miller shared his background as a Democratic donor as part of his response to questions at Sunday’s forum about whether he knows enough about how city government works. He has relationships with people in political office, as well as in the tech industry, he said, but it isn’t those relationships that would matter if he is elected, he argued. “I have relationships, but I think much more important than that, and the relationships I have with the county supervisors and the relationships with city council members, is the leadership experience,” Miller said. “The challenge we've had in this city is not due to relationships or lack thereof. The challenge we've had is a lack of executive leadership capability and executive leadership experience. I have that in spades.”

The Charter Reform Commission wrapped up its deliberations last Tuesday, on March 24, 2026, with the commissioners throwing in a big curve ball with one of its police accountability proposals. 

The commission had initially advanced a watered down version of an earlier proposal to give the Los Angeles City Council direct authority over LAPD policy. City Council members Hugo Soto-Martinez and Eunisses Hernandez had agitated for such a proposing, pointing to the current chain of authority, in which the Board of Police Commissioners (a citizen panel appointed by the mayor, but that some have criticized as ineffective) is the real boss of the LAPD, as something that has frustrated their efforts to ensure LAPD are not collaborating with ICE, and to make sure the police are adhering to rules protecting people’s First Amendment freedom to protest and journalists’ right to cover them. 

After advancing a weakened version of this proposal, the commission last week reversed course once the charter language landed. They switched out the charter language with those proposed by Soto-Martinez’s office that would make it so the City Council would essentially be the “boss” of the LAPD, just as they are with most other city departments. 

The approval of the language is a big departure from when advocates struggled to get the issue of LAPD accountability to even be taken up within the Charter Reform Commission’s schedule, in which the executive director of the commission expressed doubt that the commission would have time to take it up.

Approved language for the LAPD accountability proposal can be found here, along with other charter language the Charter Reform Commission approved for recommendation to the Los Angeles City Council and the mayor.

The commission is required to complete and submit their final report and proposal by April 2, this Thursday. Ultimately, it will be up to the council and mayor to decide if any of the proposals advanced by the Charter Reform Commission would be placed on the November ballot. The City Clerk has recommended that the City Council adopt motions to place measures on the November ballot by June 17.

Five years since Echo Park Lake eviction: Last week, it was the five-year anniversary since then-City Council member Mitch O’Farrell evicted residents of the Echo Park Lake encampment. Several mutual aid groups marked the milestone, writing that the “violent legacy of criminalization and displacement continues in Echo Park and beyond.”

On homelessness spending, two reports, one from Controller the other from the CAO: A couple of reports were released last week on the state of city spending toward addressing homelessness. The one released by the City Controller’s Office points to another year of underspending, this time by at least $473 million. Meanwhile, the City Administrative Office ahas put out a quarterly report summarizing city spending on homelessness.

Data leak confirmed at the City Attorney’s Office: The City Attorney’s Office confirmed on Saturday, March 28, 2026, that they are investigating unauthorized access to their files. They were responding to a post relayed by The LA Reporter that pointed to the leak, and that appeared to show files with the names of legal cases. Here’s the full statement from their spokesperson Ivor Pine:

The City of Los Angeles is currently investigating unauthorized access to a 3rd party file transfer tool. As part of a comprehensive investigation, we are working with external cybersecurity experts to fully understand the nature and scope of the unauthorized access. Additionally, we have implemented measures to further restrict access and secure the 3rd party file transfer tool. As part of our investigation, we are reviewing what data may have been impacted as part of this unauthorized access and will provide an update as we have more to share. There is no impact to any City services or operations, and based on our investigation, there is no evidence any additional systems have been impacted.

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