Good morning, and welcome to L.A. on the Record — our City Hall newsletter. It’s Rebecca Ellis, with an assist from my colleague David Zahniser, giving you the latest on city and county government.

’Tis the season for financial woes.

L.A. city officials can’t afford the pay raises they agreed to just last year. Legal payouts are skyrocketing. The city’s infrastructure sustained hundreds of millions in damage from the Palisades fire.

L.A. County hasn’t fared much better. Officials say they’re saddled with roughly $2 billion in wildfire costs. They’ve reached a $4-billion sex abuse settlement — the largest in U.S. history. The Trump administration keeps threatening to slash federal funds.

So how come only the city is in a financial crisis?

“We’re not writing checks that can’t be cashed,” said L.A. County Supervisor Kathryn Barger.

This week, the county unveiled its $48-billion proposed budget for the next fiscal year, put together amid what everyone agreed were “unprecedented” financial pressures.

And yet the announcement wasn’t all doom and gloom. The county wasn’t expecting any layoffs. Cuts this year would amount to a measly $89 million. And the budget was balanced.

Compared with the city, which reported a projected budget shortfall just shy of $1 billion and “nearly inevitable” layoffs, the announcement was borderline jolly.

The city’s fiscal fiasco was a “wake-up call,” said Barger, who attributed part of the county’s success to the fact that, unlike the city, she and her colleagues have not agreed to dramatic raises for employees.

“Then, we’re not laying off employees as a result of not planning our fiscal situation years out,” said Barger.

That willingness to draw the line could have other repercussions.

On Thursday, SEIU Local 721, which represents 55,000 county employees, announced they planned to strike at the end of the month, in part because, according to the union, the county has slow rolled contract negotiations.

“We’ve been stuck at zero for more than six months,” said union head David Green. “That’s just not an offer — that’s pushing people to leave their jobs.”

To weather choppy financial waters, the county is also leaning heavily on its plush rainy day fund, which it can drain to pay for the mammoth sex abuse settlement. The fund has not been touched since the aftermath of the Great Recession.

“It is like the holy grail,” said Chief Executive Officer Fesia Davenport of the billion-dollar pot.

The city, by contrast, has repeatedly tapped its reserve, which was hovering above 3% earlier this year.

L.A. Mayor Karen Bass, in an interview, said the city’s financial problems are about more than employee pay. The biggest drivers of the budget crisis are a downturn in economic activity — including lower-than-expected tax revenues — and the soaring cost of legal settlements and jury awards, she said.

“If all we had was the rising personnel costs, we wouldn’t even be considering layoffs or drastic cuts,” she said.

Longtime employees say penny-pinching has been in the county government’s bloodstream ever since it almost went bankrupt in 1995. The healthcare system was on the brink of collapse due to sloppy financial planning by county leaders.

In the end, former president Bill Clinton bailed out the county.

“It was an embarrassment,” said former Supervisor Zev Yaroslavsky, who helped steer the county out of the red. “This was like our Great Depression: We never want to be put in this position again.”

Still, the careful planning by the county’s financial minds may all be for naught.

Two days after Davenport announced her spending plan, news broke that the Trump administration planned to slash $40 billion from the federal Department of Health and Human Services, sending a wrecking ball through the county Department of Public Health.

“I think every department is just shocked, to be honest,” said county public health director Barbara Ferrer, who called the administration’s cuts “ignorant.”

The county health department gets about $1 billion — two thirds of its total budget — from federal grants, which fund prevention work for everything from lead poisoning to sexually transmitted infections.

Under the proposed federal cuts, the county department would lose about $300 million and roughly 500 employees, decimating the prevention work, said Ferrer.

“You can really now see the administration’s proposal to pretty much decimate local public health as we know it today,” said Ferrer. “You can’t absorb that level of disinvestment. I don’t have $300-million worth of efficiencies to find.”

State of play

— COSTS KEEP COMING: The county has put the estimated cost of the January wildfires at nearly $2 billion, which includes $1 billion in lost revenue and another billion to cover costs like soil testing and debris removal.

— FAILURE TO WARN: The first evacuation order for west Altadena did not come until after dispatchers had received at least 14 reports of fire in the area, according to 911 logs obtained by The Times. Nearly all the deaths from the fire occurred in west Altadena.

— POLLING PLUMMET: Bass is less popular than she was a year ago, according to a new survey by the UCLA Luskin School of Public Affairs. The drop in popularity was likely related to her handling of January’s wildfires.

— SHUTDOWN TIME: A Los Angeles County judge said Friday that he planned to shut down Los Padrinos Juvenile Hall in Downey, months after a state oversight body found it “unsuitable” to house youth. The probation department has until early May to plan a relocation for roughly 270 youths in custody.

— NO VISION: City officials released an eagerly anticipated audit of Vision Zero, a program that aims to eliminate traffic fatalities in L.A., and why it failed. Factors include poor coordination and a lack of political will from city leaders, the document said.

— RESUME QUESTIONS: The new head of the Los Angeles County Affordable Housing Solutions Agency is leaving when his contract is up this fall. Ryan Johnson’s departure comes amid concerns about his background and how closely he was vetted before taking the gig.

— TAKEOVER TAKEDOWNS: L.A. County took its first step toward dramatically increasing penalties for anyone participating in street takeovers. The county wants to double the misdemeanor fines from $500 to $1,000.

— SEEING RED: The Los Angeles chapter of the Democratic Socialists of America held its annual convention last weekend, with more than 200 members voting on priorities for the coming year. The group will focus on responses to threats from the Trump administration and, at the local level, tenant rights issues. Councilmember Eunisses Hernandez was in attendance.

— WORKING OVERTIME: The county Sheriff’s Department spent $458 million on overtime in the last fiscal year, The Times found. Those expenditures were driven in part by a reduction in the number of deputies since COVID-19.

— SOIL TESTING: The county will allocate $3 million to help homeowners in the Eaton burn area test their soil for lead contamination. The funding comes after elevated levels of the heavy metal were found in the soil of properties with homes still standing.

QUICK HITS

• Where is Inside Safe? The mayor’s signature program to combat homelessness went to the streets surrounding Angelus Rosedale Cemetery, moving more than 45 people indoors, according to the mayor’s team. The operation, which took place in the district represented by Hernandez, also resulted in the removal of 20 RVs, the mayor’s office said.
• On the docket for next week: Bass will release her budget for 2025-2026 on Monday, the same day as her State of the City address. Should be a big day!