Los Angeles County officials have unveiled a $48.8 billion recommended budget for the 2026-27 fiscal year, a plan that employs a "strategic belt-tightening approach" to preserve critical services amid significant financial headwinds. The budget, set to be presented to the Board of Supervisors on Tuesday, April 14, manages to avoid the sweeping, across-the-board cuts implemented last year while navigating deep anticipated reductions in federal funding.
The spending plan protects essential safety net programs despite facing what officials describe as a looming fiscal storm. A primary challenge is the expected decline in federal support for Medi-Cal and CalFresh, two pillars of the county's social services. Changes in federal policy regarding eligibility, enrollment, and work requirements are projected to have a devastating effect. The Department of Health Services budget alone anticipates a $662.2 million drop in federal funds needed to maintain the current level of service, a figure that underscores the scale of the challenge.
This precarious financial situation prompted a cautious approach from county leadership, which had previously instituted an 8.5% cut and a hiring freeze to balance the books. The new budget reflects a continued effort to prepare for further economic pressure on health and social services.
Facing federal headwinds
In response to the federal funding reductions, the budget includes a proposed $40.1 million investment to protect more than 1,000 jobs within the Department of Public Social Services (DPSS). This allocation is crucial for sustaining $194 million in federal and state support for CalFresh food benefits, which have been impacted by recent federal legislation. These measures aim to shield the county’s most vulnerable residents from the immediate impact of federal cuts to Medi-Cal.
LA County is currently in the eye of a hurricane,” Acting Chief Executive Officer Joseph M. Nicchitta says. “Previous cuts of 8.5% and a hiring freeze helped balance our spending plan, but we’re preparing for major new budget impacts to our health and social services departments in 2027. We are doing all we can to prepare for the next phase of the storm.
Despite the challenging environment, the budget avoids layoffs. However, it does recommend a net decrease of 81 budgeted vacant positions across all departments due to operational adjustments, bringing the total county workforce to 115,885 positions. The theme is one of preservation, ensuring that core county functions continue uninterrupted even as discretionary spending is sharply curtailed.
The budget’s new ongoing funding, sourced mainly from property tax growth, totals $334 million. Nearly 60 percent of this amount is already committed to covering cost of living adjustments and benefits for the county workforce. After meeting other obligations, only $63.2 million remains available for new, ongoing programs.
AB 218 settlement and other priorities
A significant financial undertaking for the county is its commitment to compensate survivors of childhood sexual abuse under Assembly Bill 218. The county is liable for what is considered the largest settlement of its kind in U.S. history, totalling more than $4.8 billion. The recommended budget allocates $300 million in one-time funding toward this obligation. However, with over 6,000 new and unsettled claims, many of which the county says are driven by aggressive advertising from out-of-state law firms, the financial pressure remains immense.
County officials are advocating for reforms to AB 218 to include anti-fraud and anti-client harvesting measures, arguing such changes would protect access to justice for survivors while preventing practices that drain public funds. The county is also making operational changes to better protect children in its care, with a new position created to oversee a comprehensive corrective action plan.
Recovery from the January 2025 wildfires also remains a key priority. The Board of Supervisors has established two infrastructure financing districts in Altadena and the unincorporated Santa Monica Mountains and Sunset Mesa areas. These districts will use new property tax growth to foster investment and support rebuilding. County officials continue to press for federal aid after the governor’s request in February 2025 went unanswered.
Funding new priorities
Of the limited new discretionary funding available, the budget allocates $26.7 million for alternatives to incarceration and direct community investment. This is in line with the Board's policy to set aside 10% of locally generated unrestricted revenues for the Care First Community Investment, as envisioned by Measure J. Similar fiscal challenges closer to home have led some unincorporated Pierce County communities explore cityhood.
Besides the $40.1 million to support DPSS, other recommendations for new ongoing funding include $12 million to support public defenders and manage rising caseloads, and $9.9 million to expand the Office of Emergency Management by 44 positions. This expansion is part of a multi-year plan to bolster the county’s long-term emergency response capabilities.
The budget also details $554 million in one-time funding, derived from unspent allocations from the previous fiscal year. This money is designated for non-recurring expenses, such as capital projects, and is the source of the $300 million set aside for the AB 218 settlements. Additional funding streams from federal, state, and other sources include $82.5 million for energy efficiency programs and $25.2 million for Fire Department emergency operations.
Addressing homelessness remains a central focus, supported by $1.08 billion in Measure A funding. This includes $660 million for programs managed by the new Department of Homeless Services and Housing. The county also continues its investment in mental health services, a topic of ongoing importance alongside efforts to train more mental health workers. For more detailed information, the county provides resources at ceo.lacounty.gov/budget and the California Science Center recently completed its new home for the shuttle Endeavor.
Despite the careful planning, the budget reflects more than $2.1 billion in unmet needs across county departments. The recommended budget is the first step in a multi-phase process. Public hearings on the budget are scheduled to begin on May 6, where the Board of Supervisors, department heads, and the public will work toward finalizing a spending plan that ensures the county's long-term financial stability.
