Committee reviews midyear financial report as staff outlines revenue revisions, potential layoffs and program reductions

The Los Angeles City Council Budget and Finance Committee on June 17 heard a midyear Financial Status Report (FSR) that showed revised revenue estimates and prompted questions from councilmembers about potential layoffs, use of reserves and cuts to a municipal decarbonization project.

Nick Campbell of the Chief Administrative Office presented the report, saying the office expects revised April receipts of about $39,000,000 under the revised plan and that the update reflects downward revisions from the budget the council adopted earlier this fiscal year. "Este año la ciudad tuvo que tomar varias decisiones difíciles," Campbell told the committee as he summarized the impacts of recent storms, wildfire costs and other pressures on revenues and expenses.

The report and subsequent staff comments laid out the main drivers of the variance: lower-than-expected sales and occupancy taxes, transfers and some one-time receipts, increased overtime and benefit costs in public safety departments, and wildfire and storm-related expenditures. Campbell told members the administration's updated projections include about $16 million fewer receipts in the accounting system after certain adjustments.

The committee and staff discussed potential personnel reductions. Yolanda Che1vez of the Office of the Chief Operating Officer said the city is preparing for possible staffing impacts and is planning processes to mitigate layoffs. "Estamos preparando en el presupuesto, obviamente estamos posiblemente despidiendo 600 personas ... estamos en camino a las preparaciones," Chávez said, describing processes to identify vacancies that could be used to avoid separations and a transfer/placement portal for employees.

Committee members pressed staff on data quality and the FSR process. Councilmember Hernández asked how departments compile and verify the figures and whether notes are included when information is missing; staff described a multi-step submission and review schedule and said analysts work directly with departments when data are incomplete. "Tenemos un entrenamiento inicial, tenemos instrucciones sobre lo que necesita ser presentado," staff said when describing submission standards and review cycles.

Councilmembers also raised the effect of budget decisions on the city's decarbonization program (described in the meeting as the "carbonization" or electrification plan). One councilmember said reductions to that program will delay or eliminate electrification projects across districts; engineering bureau staff responded that the decarbonization program is multi-year, that three projects are currently under construction and that progress will be adjusted to reflect available funding. Héctor, introduced as chief of the engineering bureau, summarized the program's scope: nearly 1,000 municipal buildings, measures such as energy-efficiency upgrades, solar arrays and batteries, and stated alignment with the city's LA100 goals.

Staff also reported on federal reimbursement processes for recent wildfire damage and described a June 16 deadline to finalize the inventory of damages required for FEMA reimbursement requests. Healy Hubert of the CAO office said the city is compiling documentation and expects to submit initial requests for emergency measures and debris removal first, followed by later reimbursement requests for reconstruction as projects finish.

The committee adopted the FSR item as amended and approved a technical transfer allocating $52,000 to police overtime for noise complaints in North Hollywood; the specific roll-call for the FSR amendment was called and the amendment was adopted without recorded objection.

The discussion closed with staff reiterating that the FSR is a point-in-time snapshot used to inform the next fiscal-year budget and that departments and the mayor's office will continue to monitor federal and state funding risks.

Looking ahead, staff said the administration will continue to update revenue forecasts and monitor federal budget proposals that could affect formula funding for housing and infrastructure programs.