LA City Council Signs Deal That Critics Fear Will Bankrupt Taxpayers

LA faces an open-ended financial liability after City Council rubber-stamped a pact that critics warn could bankrupt the city. In a 10-4 vote backed by Mayor Karen Bass, officials signed off on terms that leave taxpayers exposed to unlimited costs for the 2028 Olympics. The approved deal offers scant oversight or real protections for how LA28, the private organizing committee, will manage and fund this massive undertaking.

'Something SHADY is happening at City Hall,' warned Kenneth Mejia, the city's Controller. He tried to mobilize opposition against the Enhanced City Resources Master Agreement. 'The people of LA were promised a "Zero-Cost" Games,' he wrote on X. 'This was a terrible and financially irresponsible deal to begin with and it's a shame we didn't use the opportunity today to protect us even more and fight for greater transparency and accountability from LA28.'

Mejia pointed out that chances slipped away last year in 2021 and again just this month. Instead of tightening controls, the city agreed to stand behind the event financially with no ceiling on what it might have to pay if things go wrong. The risk is stark: if LA28 loses big money, the city must cover up to $600 million in losses. Should that not be enough, California would then pick up another $270 million of the tab.

Los Angeles taxpayers face an unlimited financial burden if the 2028 Olympics fail to make a profit under a controversial 2017 agreement with event organizers LA28. Mayor Karen Bass currently manages a massive $1 billion budget deficit that has already forced some municipal services into partial operation. This fiscal strain makes the risks of the new deal feel dangerously elevated for the city.

Controller Kenneth Mejia slammed the arrangement as terrible and financially irresponsible. He argued that over the last decade, the city could have built protections to shield taxpayer dollars and demand better transparency on where LA28 spends money. If costs run wild, he warned, the city is on the hook y'all. That blunt truth remains at the heart of the crisis.

Mejia backed Nithya Raman in this week's mayoral race. She was one of only four councilmembers who voted against a new agreement meant to define how Los Angeles seeks reimbursement for municipal services rendered during the Games. Critics insist this latest pact offers too few safeguards against the old 2017 deal.

The financial exposure grows when you look at the math behind security costs. LA28 has committed zero dollars to security within its $7.1 billion budget, and critics say there is no guarantee federal funds will reach Los Angeles fully. Even if every single dollar from the $1 billion federal fund lands in the city, Police Chief Jim McDonnell estimates his department alone could cost $1.15 billion just for personnel. That number would drain a new private contingency fund by $150 million instantly, leaving only $120 million for other needs.

The first layer of this financial maze is a new $270-million contingency fund set up by LA28. The city can tap it after cost overruns appear but before pulling from its general fund, that taxpayer money. A second key part forces the city to seek reimbursement for policing costs, expected to be the most expensive line item. But even if they access that first $270 million fully, Chief McDonnell's estimate suggests the gap remains huge.

Strategic Actions for a Just Economy spokesperson Chris Tyler stated plainly: LA28 has no real incentive not to bankrupt us. The ECRMA notes that if LA28 runs out of revenue and loses its profit status, it gets first dibs on the contingency fund to pay off owed costs. If the city still owes money after all that, officials can ask the California State government for another $270 million in reimbursements.

But beyond those layers, Los Angeles remains responsible for covering any remaining costs with taxpayer money up to an unlimited amount. The potential financial weight threatens to overshadow preparations where Team USA stars like Katie Ledecky and Caeleb Dressel hope to bring home a record gold haul. This drama unfolds while the city already suffers from a $1 billion deficit that has left several services only partially operational, a point former mayoral candidate Spencer Pratt highlighted during his viral campaign.

Despite record revenues, I see no real plan for the streets, sidewalks, parks, and streetlights, Pratt told the California Post. He made hay of that lack of foresight while running for mayor. And if LA28 comes in under-fundraised and over-budget, taxpayers will be on the hook for billions potentially. That is not a hypothetical scenario; it is the stark reality awaiting approval this week.

We could have put in some protections to protect the city and also provide better transparency and accountability on what the hell LA28 is going to spend their money on, Mejia added. He urged voters to remember that if they go over budget, the city pays. The clock is ticking fast as candidates argue over a deal that could cost every resident dearly.

She is continuing her wasteful spending, according to critics who fear the financial risks are mounting for Los Angeles. The city will receive access to specific federal and state funds for reimbursement purposes, yet any costs exceeding those limits must be absorbed directly by taxpayers. A US athlete competes during the 2020 Tokyo Games while LA28 prepares for its own massive undertaking.

LA28 now holds first dibs on a $270 million fund established after last week's city council vote. Team USA swimmer Katie Ledecky was pictured representing her country during the 2024 Paris Olympics just months ago. Beyond that initial pot, LA28 can tap an existing $330 million reserve if the event fails to generate a profit on its own. Caeleb Dressel of the US team is seen competing in Paris as well.

Pratt lost out against Bass and Raman during the contentious council session. Raman was among four councilors who tried but failed to introduce amendments that would have provided essential oversight and safeguards for the massive project. These proposed changes included obligating LA28 to use revenue surpluses to pay off unpredicted municipal expenses before declaring a profit. They also sought the ability to audit the Olympics finances while the games were still underway.

Of the current framework, Raman noted on X that audit rights only exist if state or federal funding is requested. That request happens only after the Games end and the money has already been spent. The other key amendment would have placed caps on the city's financial liability for municipal services, particularly the enormous expected cost of security operations.

The ECRMA was passed ten months late since it was originally due on October 1, 2025. This time crunch created intense pressure among city officials to finalize the deal despite lingering reservations from various stakeholders. Every additional month of delay reduces the runway for detailed planning needed by local businesses. Jacqueline Iniguez with the LA Area Chamber of Commerce issued a public statement warning about these delays.

The city and LA28 now need to move forward together quickly to keep the 2028 games on track, she argued. Amid growing worry, City Administrative Officer Matt Szabo has dismissed anxieties that Los Angeles could be bankrupted by the Olympics. He emphasized that the city will only be on the hook to pay if the event does not turn a profit. Raman and other councilors have unsuccessfully attempted to pass amendments to the 2017 deal that would have included stronger safeguards against overspending.

Is that a likely scenario? We do not believe so, Szabo stated. Their reports thus far suggest they are meeting targets on sponsorships and other revenues. The city wants them to continue hitting those marks consistently. We are joined at the hip here, he added regarding the partnership dynamic. They want a successful Olympics just as much as the city does. They also want a successful legacy for those 2028 Games while we want a successful event too.

The Daily Mail has reached out to Mayor Bass's office for comment on these developing financial and political tensions surrounding the upcoming games.