Los Angeles County adopts $48.8 billion FY2025–26 budget, citing AB 218 settlements and federal funding risks

Los Angeles County supervisors on Monday adopted a $48.8 billion final budget for fiscal year 2025–26, voting 5–0 to approve midyear adjustments, spending reallocations and delegated authorities aimed at paying an unprecedented $4 billion settlement and managing risks from recent wildfires and possible federal funding cuts.

The budget, presented by County Chief Executive Officer Fesia Davenport, does not create new ongoing local discretionary funding and relies in part on restricted and one‑time resources, department curtailments and a package of savings that the CEO said would yield $128.5 million in near‑term savings. Davenport told the board the county must adopt a balanced budget before July 1 and that the adopted changes are intended to preserve critical services while protecting the county’s credit ratings.

Why it matters: the County faces simultaneous, large fiscal pressures — an AB 218 settlement that the CEO described as “unprecedented,” recovery costs from January wildfires, rising labor costs tied to recent negotiations, slowing property tax growth and uncertainty about state and federal funding. The board’s decisions set the county’s spending priorities for the coming year and authorize the financing approach to cover long‑term settlement obligations.

Most important facts first: the approved budget increases the county budget by about $886 million in this final phase to a total of $48,800,000,000. Davenport said ongoing unrestricted local revenues available for programming are at a five‑year low and that modest assessor projections add about $18 million, which is more than offset by an estimated $20 million drop tied to Proposition 172 sales tax. The net result, she said, is essentially no new ongoing net county cost (NCC) to fund new county priorities in this phase.

To achieve required savings and preserve negotiated cost‑of‑living adjustments for county employees, the CEO recommended reversing $50.5 million in previously approved new funding and temporarily using one‑time resources in lieu of ongoing funds to generate an estimated $78 million in ongoing savings. The package aims to avoid deeper immediate cuts, the CEO said, but departments were asked to prepare plans for larger curtailments — as much as 5.5 percent — to be considered in the supplemental budget phase this fall.

Board members and departments emphasized competing priorities. Supervisor Hilda Solis praised continued investments for immigration legal defense through Represent LA and housing and mental health capital subsidies in district projects, while Supervisor Holly Mitchell repeatedly framed the budget discussion around the county’s role as the “provider of last resort” and urged protecting core safety‑net services. Supervisor Lindsey Horvath highlighted Measure G’s public hearings and urged greater transparency, and Supervisor Janice Hahn pressed for creativity to protect youth programs such as extended pool seasons. The Auditor‑Controller, Oscar Valdez, reported the final 2025–26 budget is balanced and ready for adoption.

On administration and implementation, the board approved delegation for specified agreements and authority needed to accept grants and to execute funding agreements for the programs included in the budget letters. The CEO also noted the budget includes using external restricted funding sources (Measure E, Measure H, Measure A and various state and federal grants) for newly added positions in this phase, and that net staffing will fall by nine positions after deleting 176 vacant postings and adding 167 positions funded from non‑NCC sources.

The budget letter includes a financing plan for the AB 218 settlements that combines near‑term cash payments and long‑term bond financing; leadership cautioned that rising interest rates or a credit‑rating downgrade would increase the county’s long‑term debt service costs. The CEO told the board that the county is setting aside resources for near‑term and long‑term payments and will return in the supplemental phase this fall with additional options should federal or state actions materially change revenue projections.

Votes and formal action: the motion to approve the final budget resolution and related midyear adjustments was moved by Supervisor Lindsey Horvath and seconded by Supervisor Holly Mitchell. The roll call recorded “Aye” votes from Supervisors Hilda Solis, Holly Mitchell, Lindsey Horvath, Janice Hahn (recorded as a reluctant aye), and Kathryn Barger; the motion carried 5–0.

What’s next: departments were instructed to prepare curtailment plans for additional reductions that could be required in September. The CEO said the supplemental budget phase in late summer/early fall will revisit assumptions and may include additional adjustments pending outcomes at the state and federal levels.

“I just mentioned the many budgetary pressures…taken together, they are simply unprecedented,” Davenport said during her presentation, summarizing the mix of settlement, wildfire, labor and federal risks facing the county.

Ending note: supervisors and staff repeatedly stressed that the current actions are intended to bridge the county to the supplemental budget phase, but that additional difficult choices remain if state or federal actions reduce funding further.