Los Angeles' Financial Condition Improves, Earning a “C” Grade

Los Angeles’ financial condition showed some improvement in fiscal year 2023, but the city still faced a $1.5 billion shortfall. This equates to a Taxpayer Burden™ of $1,000, earning Los Angeles a “C” grade and classifying it as a “Sinkhole City” in Truth in Accounting’s latest report.

A key factor in Los Angeles' financial improvement was a reduction in its unfunded retiree healthcare liabilities. Unlike many other municipalities, Los Angeles has been proactive in pre-funding its retiree healthcare benefit plans, strengthening its long-term financial stability. Additionally, unrealized investment gains helped reduce the city’s financial gap, providing short-term relief.
Key findings from the report include:

• Los Angeles had $20.3 billion available to pay $21.8 billion in bills.
• The city’s financial shortfall amounted to $1.5 billion, leaving each taxpayer with a $1,000 burden.
• Strategic planning and investment gains improved financial health, but the city still faces long-term fiscal challenges.

While Los Angeles has taken steps to strengthen its financial outlook, addressing ongoing liabilities will be essential to maintaining long-term fiscal stability.

For those interested in a deeper dive into Los Angeles’ finances—and how it compares to other major U.S. cities—you can read the full Financial State of the Cities 2025 report here.