The City of Long Beach is facing mounting financial pressure as officials project a deficit of up to $80 million by fiscal year 2027, raising growing concern about the city’s long-term fiscal stability and how its budget is being managed at the highest levels of city representation.
A newly released year-end financial report shows the city closed fiscal year 2025 about $40 million over budget, forcing officials to draw down reserve funds, including roughly $20 million in leftover pandemic-era funding, along with reserves previously set aside for disaster response, a cannabis tax relief pilot, and a police crime lab.
The warning comes as Long Beach adopted a $3.7 billion FY 26 budget, balanced largely through one-time funding sources. While the budget avoids immediate layoffs and service cuts, city documents acknowledge it does not fix the structural deficit. Long-term projections show a cumulative shortfall of more than $60 million between FY 27 and FY 31, with the FY 27 deficit alone now estimated between $60 million and $80 million, up from a prior projection of $39.3 million.
Officials cite declining revenues and rising costs, including a $26 million drop in combined sales, property, and utility tax revenues, along with flat or reduced state and federal funding. The city’s Health Department ended FY 25 with a $14 million deficit, including the loss of a $9 million federal health infrastructure grant. Additional pressures include rising payroll and benefit costs, workers’ compensation and liability payouts, declining oil revenues, vandalism and property damage, and costly infrastructure needs ahead of the 2028 Olympics.
Although the city’s total annual budget is about $3.7 billion, only about $750 million is General Fund money available for core services…