(The Center Square) – Los Angeles is seeking a $1.9 billion state bailout after receiving $2.5 billion in state aid thus far.
Los Angeles faces a $1 billion deficit due to spending vastly outpacing revenues — issues that predated the fire and which City Controller Kenneth Mejia has long said are making the city go “broke.”
Much of that funding is set to go toward existing city issues, such as ballooning liability payouts, with $38 million requested to cover revenue lost from the fires.
California Gov. Gavin Newsom’s order granting extensions for mandatory ethics disclosures of behested payments or conflicts of interest for government officials in Los Angeles County means it could be easier for corruption to go undetected amid an influx of cash.
The area’s state legislators sent a joint letter to Assembly Budget Chair Jesse Gabriel, D-Encino, outlining their funding request. Included items are $638 million for city services and lawsuit payouts, including $250 million for street, sidewalk and street light improvements, $200 million for the “extraordinary spike in liability payouts,” $150 million for replenishing the city’s budget reserves and $38 million to “make up for lost revenues from the Palisades fire.”
The legislators also are asking for $750 million for “mitigation and resilience for city residents,” which includes $700 million for “upgrades to the electric power grid in Pacific Palisades,” $40 million for incentives to switch to electric appliances “that increase reliability during outages” and $10 million for upgrades to the smart-city traffic control program.
Less controversially, the legislators are requesting $301 million to cover disaster recovery expenses expected to be reimbursed by FEMA.
The request includes $16.5 million for brush fire equipment, staff and vehicles, but also $40 million to address “issues” with the Palisades reservoir that was built to provide water to fight fires but has been left empty for years to make repairs to its plastic cover. It’s unclear why the Los Angeles Department of Water and Power has neglected to keep the reservoir filled, as fire-fighting water does not need to be potable.
The legislators are looking for $15 million for emergency housing vouchers for displaced residents and $75.5 million for the California Governor’s Office of Emergency Services to “expedite CalOES processing of FEMA Public Assistance from previous emergencies, particularly COVID-19.”
The last request suggests CalOES has significant unspent funding due to its inability to process paperwork and that the $75.5 million may be required to be spent on processing labor to unlock already allocated, but paperwork-protected funds.
“These amounts reflect the City’s ongoing need for support in the areas of site cleanup, housing assistance, public safety, infrastructure restoration and economic support for impacted communities,” concluded the legislators. “These investments are essential not only for immediate relief but also for fostering the City’s long-term stability and preparedness.”
With the state’s revenue highly reliant on capital gains from the stock market, ongoing market volatility could threaten the state’s proposed $322 billion budget, which includes a $7 billion reserve withdrawal. This revenue volatility could spell trouble for the state’s ability to bail out Los Angeles, as broad budget cuts may be necessary.