In Los Angeles, the state of the city isn’t great

L.A. Mayor Karen Bass delivered the annual State of the City address Monday on the heels of a report from the City Administrative Officer that the actual state of the city is deep in the hole.

The January 19 memo from Matthew Szabo informed the City Council that current fiscal year revenues had fallen further since his last report, from $93 million “below plan” to $158 million worse than expected, and overspending, estimated earlier at $297 million, was likely to increase with “the approval of tentative agreements reached with the Coalition of City Unions.”

The City Council still has to approve those agreements, which include generous raises for civilian city workers estimated to add $1 billion per year to the city budget by 2028. This follows a new labor agreement with LAPD earlier in the fiscal year that increased “overspending” in 2023-24 by $80 million for salaries and $17 million in overtime.

Bass briefly referred to “a tough budget year” and “rising costs,” but didn’t mention Szabo’s recommendation that the Council seek “revenue enhancement opportunities including ballot measures,” which is another way of saying (or not saying) “tax increases.”

The mayor praised the new LAPD contract and forcefully told the Council, “We must pay our workers fairly.”

With what?

Szabo noted that business and sales tax revenue are $32 million and $18 million “below plan,” transient occupancy (hotel) tax revenue is down $15 million, and documentary transfer tax revenue is $25 million short of expectations despite (or because of) the tax increase from Measure ULA.

Much of the mayor’s speech was devoted to praising her Inside Safe program to address homelessness, without mentioning that it’s soon to be the subject of two audits, one by city controller Kenneth Mejia and another ordered by U.S. District Judge David Carter, who is overseeing a lawsuit settlement, to attempt to find out where all the money has gone.

Bass said Inside Safe is “evolving.” Acknowledging the high cost of providing nightly motel rooms, the mayor said she’ll call on “the most fortunate” to provide their “personal, private and philanthropic funds” to help finance new housing.

That call could easily evolve into another troubling round of pay-to-play in Los Angeles.

The state of the city isn’t great.