L.A. faces a $200M budget gap in 2025-26 due to falling tourism, grants, and taxes, despite some revenue gains.

Los Angeles is projected to exceed its 2025-26 budget by over $200 million, despite revenues near or slightly below estimates. Key shortfalls include a 6% drop in hotel tax revenue due to reduced tourism, a 100% decline in special parking fees, and a 62% decrease in federal grants. Property tax revenue fell $23 million short. Utility and business tax collections rose, helping offset gaps. The city used prior-year funds and a stabilization fund transfer to cover shortfalls. Controller Kenneth Mejia warned of potential layoffs or reserve depletion without stronger fiscal controls, citing uncertain future revenue due to global events and declining federal support.