How do these types of settlements usually work? Do the offending officials help pay for the settlement or are all the costs paid for using taxpayer money?
Sometimes the government employee does something so agregious that we say "we cannot defend you: you are on your own" but that is really rare.
Cities get a lot of money through taxes so one could say that it's paid for by taxpayers although it wouldn't be completely accurate as they have other revenue sources (fines, Federal money, etc).