By Jose E. Navarro | The Navarro Report | Los Angeles Affairs | Investigation
Los Angeles is currently running two separate experiments in what happens when a government takes on financial risk without anyone directly accountable for containing it. One is old and already costing taxpayers hundreds of millions of dollars a year: the city’s runaway liability payouts. The other is new and potentially far larger: the city’s unlimited financial backstop for the 2028 Olympics. Different departments, different timelines, different lawyers — but the same underlying failure. In both cases, the people who create the exposure are not the people who pay for it, the people who approve the budget keep underestimating it, and the one office built to sound the alarm has no power to force a fix. This is an attempt to trace the money and name who, specifically, bears responsibility.
The liability payouts: a general fund with no owner
The City of Los Angeles paid out nearly $472 million in liability claims between fiscal years 2020 and 2023, according to data City Controller Kenneth Mejia’s office has published on its liability claims dashboard. The City Administrative Officer told local reporters last year that the general fund alone had covered more than $525 million in liability claims since 2023 — a figure already on pace to exceed the budgeted amount for the current fiscal year at the time. In one recent fiscal year, the city blew through its entire $87 million liability budget in the first three months, paying out $97 million, with $59.4 million of that tied to the LAPD alone. Some of the sum was concentrated in roughly 400 individual transactions tied to just two incidents — meaning a small number of failures, not routine wear and tear, drove much of the overrun.
Mejia has been the most consistent voice flagging this as a structural problem, not a series of unrelated bad-luck settlements. “Liability claim payouts aren’t taken out of the budgets of the individual City Department that gave rise to the liability — instead, they mostly come out of the General Fund, which is mainly used to fund city services and resources for Angelenos,” he has said. That single sentence is the whole design flaw: the department whose conduct produced the lawsuit — overwhelmingly the LAPD — never feels the cost in its own budget. The bill instead lands on the same pool of money that pays for libraries, parks, sanitation and every other basic city service, and it lands after the fact, when the only remaining options are draining the Reserve Fund, furloughs, or layoffs. Mejia’s office launched a formal performance audit of the city’s risk-management practices last year specifically to find where the harm originates and why it keeps recurring — but the Controller’s office has no authority to compel the LAPD, the City Attorney or the City Council to change how the money flows. It can only publish the numbers and ask.
The City Attorney’s office sits at the center of this exposure twice over. It is the office responsible for defending the city against these claims and negotiating the settlements that hit the general fund — and, separately, it was the office whose own cybersecurity failure created a new and still-unquantified liability. In March, hackers breached a third-party discovery-transfer system used by the office, exposing 337,000 files and 7.7 terabytes of data, including unredacted LAPD personnel records, internal affairs investigations and witness medical information. The office waited more than two weeks to disclose it publicly. Outgoing City Attorney Hydee Feldstein Soto, who finished third in her own re-election primary, leaves that breach — and the lawsuits it is already generating — to whichever of her two remaining challengers, Marissa Roy or John McKinney, wins in November. Both campaigned explicitly on an inability to control the office’s liability costs; neither has detailed a plan that changes the department-level incentive structure Mejia has identified as the actual driver.
The Olympics: unlimited liability, and a reimbursement deal ten months late
The second exposure is structurally similar but larger in scale and still unresolved. Los Angeles is the financial guarantor of the 2028 Olympic and Paralympic Games. Under the framework negotiated years ago, the city covers the first $270 million of any cost overrun, the state covers a second $270 million layer, and beyond that, the city’s exposure is effectively unlimited — a risk 1984 organizers under Mayor Tom Bradley deliberately avoided by keeping the Games privately financed with no public backstop. LA28, the private organizing committee chaired by Casey Wasserman, projects a budget near $7.15 billion funded by tickets, sponsorships and IOC contributions. Independent analysts and advocacy groups have warned the real number could run far higher: a Strategic Actions for a Just Economy report put the realistic cost closer to $12 billion once security, sanitation, transit fast-tracking and city staff time are counted — costs LA28 has promised, but not contractually guaranteed, to reimburse.
That promise remained undocumented for the better part of a year. The Enhanced City Resources Master Agreement — the document spelling out exactly how LA28 reimburses the city for services like traffic control and trash pickup that don’t qualify for federal reimbursement — was nearly ten months late as of this August. The City Council finally approved an amendment to it on Aug. 12 in a 10-4 vote, with council members Monica Rodriguez, Nithya Raman, Eunisses Hernandez and Ysabel Jurado voting no. Their objection was specific and unresolved: the deal does not guarantee the city is repaid in full before LA28 can declare a post-Games surplus. Raman, who is separately challenging Mayor Karen Bass in November’s mayoral race, introduced an amendment requiring LA28 to use any leftover revenue to fully cover the city’s costs first. It failed. City Administrative Officer Matt Szabo, the lead negotiator, has defended the deal as protecting taxpayers by securing upfront funding for non-federally-reimbursable services and giving the city a claim on an LA28 contingency fund if federal security reimbursement falls short. Whether that claim actually gets paid ahead of LA28’s own investors is precisely what the four dissenting council members say the amendment fails to lock down.
Who is actually responsible
Layer these two stories on top of each other and the same four points of failure repeat. First, the entity that generates the risk — the LAPD in the liability case, LA28 as a private committee in the Olympics case — does not carry the corresponding financial consequence in its own budget or contract terms. Second, the officials who approve the budget consistently underfund or under-secure the exposure: the City Council and Mayor’s office have set liability budgets that get blown through in months, and spent nearly a year without a finalized reimbursement mechanism for Olympic city services while planning continued regardless. Third, the City Attorney’s office, meant to manage and minimize the city’s legal and financial exposure, has instead added to it through its own data-security failure, with the fiscal consequences of that breach still working through the courts. Fourth, the one office actively documenting all of this — Controller Kenneth Mejia’s — has publication power but no enforcement power; it can tell Angelenos exactly how much city services are being drained to cover payouts and Games-related risk, but it cannot force the City Council, the City Attorney or LA28 to restructure the underlying deals.
The pattern that connects a police liability crisis to an Olympic reimbursement fight is not incompetence in any single office. It is the absence of a mechanism that makes the entity creating financial risk also the entity that pays for it. Until the city closes that gap — by charging liability payouts back to the departments that generate them, or by requiring LA28’s contractual guarantees to match the scale of the city’s unlimited exposure — taxpayers will keep discovering the bill only after it has already been paid out of the fund meant for their own services.
Human-Directed AI Journalism: This article was researched and drafted with AI assistance under the direction, editing, and final approval of Jose E. Navarro.