Introduction to the City’s Financial Situation
Los Angeles Mayor Karen Bass portrayed a dire financial situation for the city of Los Angeles in a budget preview released Wednesday that called for "leaving no stone unturned."
Bass said her 2025-2026 budget proposal will "deliver fundamental change to the way the City operates. In a letter to Los Angeles City Administrative Office Matthew Szabo, Bass directed his office to come up with a plan to save between $500 million and $900 million in structural budgetary expenses in the 2025-26 Fiscal Year.
The Need for Sweeping Reform
"For too long, the City’s budget and operations have simply been based on the way the City operated in the previous year," Bass said in a statement. "This year, we must deliver fundamental change in the way the City operates and base our budget on how the City can best serve the people of Los Angeles and to best use their scarce budget dollars.
“Since taking office two-and-a-half years ago, I have confronted some of our city’s toughest challenges by working to change the broken status quo at City Hall. The need for structural sweeping reform of the City’s budget and operations has only intensified, and changing the status quo is at the heart of my office’s work as we continue to draft my proposed budget for the 2025-26 fiscal year."
The Upcoming Budget Year
The upcoming budget year starts in July. Bass’ proposed budget will be released next month.
Szabo told the City Council Wednesday that the nearly $1 billion in cuts will make layoffs "nearly inevitable."
"We are not looking at dozens or even hundreds of layoffs, but thousands," Szabo said. "While layoffs may be necessary, it cannot and will not be the only solution.
"I can tell you that the mayor is absolutely committed to preserving as many jobs and city services as possible, as we face these economic headwinds."
Factors Affecting the Budget
Citing downward economic trends, Bass’ office said revenues for the 2025-2026 budget a projected to be hundreds of millions of dollars less that projected. Legal liability payments and the devastating Palisades Fire, including emergency response and recovery, were among the significant costs cited by Bass. Her letter also notes decreased revenue due to lower property tax assessments on homes and businesses lost in the January fire, one of the most destructive on record in California.
Uncertainty over federal funding and "ever-changing tariff proposals" added to budget concerns, Bass’ letter said.
Leaving No Stone Unturned
"For too long, the City’s budget and operations have simply been based on the way the City operated in the previous year," Bass said in her letter. "This year, we must deliver fundamental change in the way the City operates and base our budget on how the City can best serve the people of Los Angeles and to best use their scarce budget dollars."
The letter urged the city’s chief budget officer to consider proposals that reduce liability costs, reassign services to focus on the city’s most critical services, reduce department contract expenses, achieve payroll and benefit savings and create structural reforms.
"We must leave no stone unturned," Bass said. "We must consider no program or department too precious to consider for reductions or reorganization. In this time of economic uncertainty, our north star must be whether a City program or department is operating as efficiently and effectively as possible. If they can operate better, or if they should not operate at all, we must make those changes, and make them now."
Conclusion
The city’s financial situation is dire, and sweeping reform is necessary to address the budget deficit. The mayor’s proposal to save between $500 million and $900 million in structural budgetary expenses is a step in the right direction. However, the potential layoffs and reduction in city services will have a significant impact on the community. It is essential to consider all options and leave no stone unturned to ensure the city’s budget is operating efficiently and effectively.
FAQs
Q: What is the projected budget deficit for the 2025-2026 fiscal year?
A: The projected budget deficit is between $500 million and $900 million.
Q: What factors are contributing to the budget deficit?
A: Downward economic trends, legal liability payments, the devastating Palisades Fire, and uncertainty over federal funding are contributing to the budget deficit.
Q: What is the mayor’s proposal to address the budget deficit?
A: The mayor’s proposal includes reducing liability costs, reassigning services, reducing department contract expenses, achieving payroll and benefit savings, and creating structural reforms.
Q: Will there be layoffs as a result of the budget cuts?
A: Yes, layoffs are nearly inevitable, with thousands of city employees potentially affected.
Q: When will the mayor’s proposed budget be released?
A: The proposed budget will be released next month.
