Four months into the fiscal year, the city of Los Angeles has already overspent its budget by nearly $300 million, according to a report released this week by the City Administrative Officer.

The city is in “a particularly challenging financial position,” the report states, noting increased legal liability and labor costs across a number of departments.

L.A.'s reserve fund has dropped to 4% of revenues, according to the report. The city has a policy of keeping the fund at a minimum of 5%. If it drops below 2.75%, the council would need a two-thirds vote to withdraw money from it. That could threaten the city’s bond rating, which would increase the city’s borrowing costs.