LOS ANGELES _ Los Angeles budget officials are warning that the city needs to immediately borrow tens of millions of dollars to avoid dipping into its emergency reserve fund after several high-profile lawsuit payouts.
The City Administrative Office recommended in a new report that the city borrow $50 million to $70 million to address cases that are part of a "new trend of increased liability payouts."
The city typically budgets $60 million a year for its legal liability fund, but has already paid out $135 million since July 1, when the current fiscal year began.
Recent significant payouts include a $200 million settlement by the Los Angeles City Council over a housing-related lawsuit brought by disabled groups and an $8 million settlement to end lawsuits related to the fatal Los Angeles Police Department shootings of three unarmed men in separate incidents. The $200 million will be paid out over 10 years.
The report recommends issuing a bond and warns against dipping into the city's reserve fund, which is for financial emergencies.
As of November, the reserve fund stood at about $295 million, which the report said is "only precariously above" the minimum amount required under city policy _ 5 percent of the General Fund budget.
The recommendation comes after the city paid out $100 million in legal cases last fiscal year, said Assistant City Administrative Officer Ben Ceja.
He said the rising expenditures "could be the new normal in terms of paying out cases."
