Los Angeles County faces $47.9 billion budget with mounting cuts, $4 billion AB 218 settlement and wildfire costs

Los Angeles County’s recommended budget stands at $47.9 billion and is facing a faster‑moving series of new pressures that could force cuts or borrowing, County Chief Executive Officer Fesia Davenport told the Board of Supervisors on May 7.

Davenport said the county is already “leaner” than in prior years and that the recommended budget is nearly $1.3 billion smaller than last year’s final budget. She told the board the county has cut hundreds of positions and reduced departmental spending, but said new developments — including a $4 billion settlement under AB 218 and recent wildfire response costs — are making the fiscal picture worse.

Why this matters: the settlement and other shocks reduce the county’s flexibility to fund programs and could force tradeoffs in services or borrowing. Davenport warned that borrowing to pay the AB 218 settlement would extend costs for decades and that any downgrade in the county’s credit rating would raise borrowing costs.

Key facts and figures - Recommended budget: $47,900,000,000 (as presented by Davenport). - The county faces a $4,000,000,000 settlement related to AB 218; Davenport said the county will be “paying it off for decades.” - Wildfire response and projected lost revenue were estimated by county staff at about $2,000,000,000. - Recent notices included a $45,000,000 cut in public health grants and $53,000,000 in public works funding at risk; staff are still analyzing federal proposals that could add hundreds of millions in reductions. - Ongoing labor negotiations and the cost of prior contracts were highlighted: prior three‑year contract cost increases added more than $1.7 billion in ongoing costs, of which Davenport said about $691,000,000 are ongoing net county costs with an additional roughly $68,000,000 one‑time cost.

Davenport told the board that property tax revenue growth — the slice of dollars the board can vote to program for new or expanded services — has slowed sharply and that projected growth for future years has fallen. “This steep decline … represents nearly $100,000,000 less than last year and more than $200,000,000 less than fiscal year ’22‑’23,” she said.

Board response and next steps Board members stressed the county’s dual responsibilities to preserve essential safety‑net services and the county workforce while avoiding structural deficits. Supervisors noted the urgency of federal and state actions — including a governor’s May revision and federal budget proposals — and asked staff for updates as details materialize.

Davenport said staff will revisit funded programs in the recommended budget, monitor federal and state actions, and return to the board for final changes on June 23 with final adoption scheduled for September 30.

Context and limits County staff emphasized that many federal and state grant dollars are restricted and cannot be repurposed; staff also warned that some program impacts cannot realistically be backfilled from the county’s resources. The board approved a motion to receive and file the public testimony from the hearing and close oral testimony while accepting additional written input through the close of business on the date set by the clerk.

Ending note The board’s budget deliberations will continue through June and into the supplemental adoption in September, with county staff preparing curtailment scenarios and further analysis of both revenue and expenditure risks.