Los Angeles City Projected to Overspend Budget by $200M

City Controller warns of need for better spending controls and accountability measures

Mar. 13, 2026 at 1:20am

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With four months left in the 2025-26 fiscal year, the City of Los Angeles is expected to overspend its budget by more than $200 million, despite general fund revenues being on track to meet or slightly miss estimates. The city's Controller's Office cited challenges such as wildfires, tariffs, geopolitical turmoil, and federal immigration enforcement as factors impacting the city's finances.

Why it matters

The city's budget shortfall raises concerns about Los Angeles' long-term fiscal sustainability and its ability to provide essential services and resources to residents. The report highlights the need for the city to implement better spending controls, accountability measures, and strategic long-term planning to avoid short-term fixes like layoffs, furloughs, and tapping into reserve funds.

The details

The report estimated that tax revenue in fiscal year 2026-27 will slightly increase by 1%. However, the city saw decreases in revenue from the transient occupancy (hotel) tax, special parking fees, and federal grant funding. On the other hand, revenue from utilities, business taxes, and one-time state aid helped offset some of the losses.

  • The 2025-26 fiscal year ends on June 30, 2026.
  • The 2026-27 fiscal year begins on July 1, 2026.

The players

Kenneth Mejia

The City Controller of Los Angeles who released the annual Revenue Forecast Report.

Mayor's Office

The office of the Mayor of Los Angeles, which is working with the Charter Reform Commission on adopting a two-year budget process and a capital infrastructure program.

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What they’re saying

“Although revenues are expected to remain flat with the budget throughout the current fiscal year and go slightly up next fiscal year, the city must enact better controls and accountability measures on overspending and massive liability payouts.”

— Kenneth Mejia, City Controller (nbclosangeles.com)

“We look forward to building on this collaboration as we get the city on the right fiscal path, so it can provide the service and resources Angelenos deserve.”

— Kenneth Mejia, City Controller (nbclosangeles.com)

What’s next

The City Controller's Office will continue to advocate for a long-term, strategic approach toward fiscal sustainability, including the implementation of a two-year budget, capital infrastructure program, transparent budgeting, performance-based budgeting, and accountability measures for overspending and liability claims.

The takeaway

This budget shortfall highlights the need for Los Angeles to strengthen its financial management practices and long-term planning to ensure the city can reliably provide essential services and resources to its residents, even in the face of economic challenges and external factors beyond the city's control.