Los Angeles County expects $2 billion in fire costs, adding to budget woes

LOS ANGELES – Los Angeles County is facing a mounting financial crisis, its top manager said Monday, as expected cuts in federal funding, a record $4 billion settlement for sex-abuse allegations and the destructive wildfires in January threaten Southern California’s economy.

Fire-related costs are expected to approach $2 billion, Fesia Davenport, the county’s chief executive, said at a news briefing. The figure includes about $500 million in immediate costs plus lost revenue and recovery spending, and illustrates the lingering toll of the wildfires that began Jan. 7, killing 30 people and destroying thousands of homes.

One fire all but leveled the Pacific Palisades neighborhood in the city of Los Angeles’ jurisdiction, and another destroyed much of Altadena, also in the county’s jurisdiction. Last month, city officials projected a $1 billion budget shortfall for next year that stemmed from fire costs, legal liabilities and federal policy disruptions. City leaders said they were weighing steep budget cuts and possible layoffs.

Los Angeles County is bigger than some states, with a population of nearly 10 million and over 100,000 mostly unionized public employees. Davenport said layoffs of county workers were unlikely, but that the region’s financial challenges had rapidly intensified.

“The closest thing I can think of is COVID,” she told reporters, comparing the budget woes to the pandemic, which still impacts the regional economy.

Besides the costs of the wildfires, she said, the county also stood to lose hundreds of millions of dollars or more in federal funds from policy changes in the Trump administration.

She cited the administration’s decision last month to cancel more than $12 billion in federal health grants, which were allocated to states during the pandemic. The move led to an abrupt loss of $45 million in funding for the county’s Department of Public Health. Those funds had helped support disease surveillance, outbreak investigations, infection control and more. A coalition of states is challenging the decision, which has been blocked by a temporary restraining order for now.

Adding to the pressure is a legal settlement of nearly 7,000 sexual-assault claims brought under a state law by adults who were in the county’s juvenile detention and foster care systems as children. The law dramatically expanded the vulnerability of public agencies to lawsuits filed by adult survivors of sexual abuses, and has generated a wave of legal claims that has threatened the finances of municipalities and school districts across California.

This article originally appeared in The New York Times.