LA City Council OKs Plan To Borrow Up To $70M To Cover Civil Lawsuit Payouts

LOS ANGELES (CBSLA.com) — The Los Angeles City Council Wednesday authorized staff to begin the process of borrowing up to $70 million to help cover the rising cost of civil lawsuit payouts, which have created a budget deficit.

The motion, which directs city staff to look at ways to improve the city's revenues, asks for a review of existing cases so that the budget's liability account could be more adequately funded for the 2017-18 fiscal year.

The city has made over $135 million in liability payouts since the fiscal year began on July 1, which is $67 million more than what was budgeted for, according to a report from former City Administrative Officer Miguel Santana.

Payouts scheduled for this fiscal year include an agreement in August to spend at least $200 million over the next 10 years to settle a disability lawsuit and a vote in December to settle lawsuits for a total of $8.15 million with the families of three men shot and killed by Los Angeles Police Department officers.

Santana, whose last day on the job was Friday after serving as CAO since 2009, told the Budget and Finance committee that as far as he can recall, this was the first time he had ever recommended a judgment obligation bond.

When the plan was first introduced to the Budget and Finance Committee on Jan. 9, Councilman Mitchell Englander expressed hesitation at the plan, saying it was like "putting a mortgage payment on a credit card."

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