Protecting American Consumers Together announced on their website that the City of Los Angeles is facing a nearly $1 billion budget deficit due to soaring liability claim payouts.
According to The California Globe, Los Angeles's city budget deficit is approaching $1 billion for fiscal year 2025-26, driven by skyrocketing liability payouts. The city had budgeted only $100 million for liability claims in 2025, but City Administrator Matthew Szabo recently informed the City Council that the city is now "likely to spend $320 million," exceeding the budget by 220%. Szabo also warned that the city's reserve fund was drawn down to just 4%—below the mandated 5% threshold—and that Los Angeles may need to borrow at least $80 million, which could incur up to $20 million in interest costs under current rates.
Liability settlements in Los Angeles have surged dramatically in recent years, playing a critical role in the city's fiscal crisis. Data from LAist shows the city is projected to spend around $320 million in FY 2025 on liability claims, following a payout of about $277 million in the prior fiscal year—both far exceeding the budgeted amount of roughly $87 million. The paper notes that over the last two years, total payouts nearing $600 million roughly match all expenditures by the city on homelessness services, illustrating how civil settlements have siphoned off funds from essential public programs.
According to a detailed liability report released by Controller Kenneth Mejia and summarized by WestsideToday, the LAPD accounts for $107 million in payouts during the first quarter of FY 2025 alone—with $52 million for excessive-force and civil rights violations, $25 million for traffic collisions, $23 million for professional negligence, and $8 million for employment claims. Other major obligations include $26 million by Street Services, $16 million by the Department of Transportation, and $11 million for street lighting liabilities, each diminishing the funds available for departments like fire and parks.
Protecting American Consumers Together (PACT) is a national 501(c)(4) advocacy and educational organization focused on defending the rights of plaintiffs, victims, and consumers. According to PACT, they work to promote a fair and transparent legal process while protecting the public from exploitative practices within the personal injury system.