Local Lawsuits Raffle System
New York City is set to compensate potentially thousands of claimants who failed a teacher-certification test between 1994 and present, with a budget of $1.8 billion. This move comes as the city's liability costs have more than doubled since 2013, with an average annual increase of nearly 6 percent from 1993 to 2013.
Meanwhile, Chicago's police department has incurred about $39 million in judgments and settlements due to wrongful convictions tied to a disgraced ex-detective. The city's payouts are nearly double what the city budgeted for settlements and judgments, with over $68.5 million paid out by the LAPD alone to its own employees over the past five years.
In Los Angeles, the financial crisis was triggered by a severe budget shortfall due to decreased tax revenues and economic downturn, leading to cuts in the fire department's budget during the fiscal tightening. The city's neglect of basic infrastructure, such as street maintenance and streetlight inspections, has created unsafe conditions that have led to costly judgments for injuries on public property. It can take up to six months to replace a single streetlight bulb in Los Angeles, and nearly half of city streets need repaving.
State laws and court settlements based on questionable claims have contributed to the surge in liability costs in all three cities. For example, in New York City, the rise in special-education claims is due to a Supreme Court ruling that allows parents of special-needs children to seek private school tuition at taxpayers' expense if they believe local public schools fail to provide adequate instruction. Judgments under this ruling have jumped fivefold from $200 million in 2014, with New York City now responsible for nearly $1 billion in annual special-education claims.
California passed legislation in 2018 allowing workers to file claims for harassment or a hostile work environment based on a single incident. This has led to an increase in claims and settlements in Los Angeles.
The city's corporation counsel has stated that more settlements are expected in all three cities, with New York City paying out nearly $2 billion in claims last fiscal year, a one-year jump of almost $500 million. This year, lawsuit liabilities will cost the city more than the wildfires themselves.
City officials' neglect of basic infrastructure has created favorable conditions for lawsuits and increased costs for taxpayers. As these cities grapple with their financial challenges, it remains to be seen how they will address these issues and mitigate the risks of further costly legal battles.
