Santa Monica Faces Fiscal Crisis After $229M Sexual Abuse Settlements

Santa Monica is confronting a severe fiscal crisis driven by a combination of declining tourism revenue, increased crime, and massive legal settlements totaling over $229 million related to sexual abuse claims against a former city employee. The city faces nearly 200 additional claims and has financed these settlements by depleting general fund reserves and borrowing more than $52 million from other city funds, resulting in a structural budget deficit projected to persist for years. In response, the City Council is considering declaring a state of fiscal distress or emergency, aiming to secure state legislative support for capping sexual abuse claims and exploring revenue increases such as raising parking fees. Despite these financial challenges, the council plans to advance significant policy initiatives, including a Building Performance Standards ordinance targeting large existing buildings. Mayor Lana Negrete emphasized the distinction between fiscal distress and emergency and has rejected federal assistance involving the National Guard for crime reduction. Experts note that recent extensions to the statute of limitations on sexual abuse claims have contributed to the city's financial difficulties, with little expectation of legislative rollback.