Top LA city official says $1 billion budget deficit could lead to thousands of layoffs

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Craig Nigrelli Reporter

By Craig Nigrelli (Reporter), Jack Henry (Video Editor)

The city of Los Angeles is looking at a massive $1 billion budget deficit in the upcoming fiscal year. The result will likely be thousands of layoffs, according to a top city official.
The costs associated with the devastating wildfires this year are among the reasons for the revenue shortfall.
Mayor Karen Bass will deliver the budget, with the steep cuts included, in late April.

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The city of Los Angeles is facing a $1 billion budget gap for fiscal year 2025-26 that will require massive cuts. The city’s top financial adviser delivered the outlook on Wednesday, March 19.

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City Administrative Officer Matthew Szabo said the city is looking at thousands of layoffs, not hundreds. He added that layoffs will not be the only solution.

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What are some of the contributing factors to the large deficit?

The large budget deficit is reportedly a result of lower than anticipated tax revenue, increased liability or legal payouts, and money for waste fees and funds needed to cover Los Angeles police and firefighter pensions.

Szabo said the city’s rising liability payouts pretty much tripled in the past year, from $112 million to $320 million. The city is now working with the California Legislature on a bill to possibly cap damages.

Pay raises for city workers are set to kick in on July 1, adding $250 million in costs. The City Council is now discussing various contracts and possible concessions with unions representing public employees, including police, firefighters, garbage truck drivers and librarians.

Mayor Karen Bass, D, issued a statement saying that her upcoming budget will make the best use of their scarce dollars. However, she warned of fundamental changes in the way the city operates. She urged the chief administrative officer to report to her with plans to reduce spending while protecting essential services.

What’s next?

Projections show that revenue will fall hundreds of millions of dollars short due to trade, immigration policies and the impact of this year’s devastating wildfires.

Mayor Bass will deliver her budget, detailing the steep cuts on April 21.

Tags: budget, California, Karen Bass, Layoffs, Los Angeles, Police, Taxes, Wildfire

[Craig Nigrelli]

THE CITY OF LOS ANGELES IS FACING A $1 BILLION DOLLAR BUDGET GAP FOR FISCAL YEAR 2025-26 THAT WILL REQUIRE MASSIVE CUTS. THE CITY’S TOP FINANCIAL ADVISOR DELIVERING THE BLEAK OUTLOOK WEDNESDAY – SOUNDING THE ALARM.
CITY ADMINISTRATIVE OFFICER MATT SZABO SAID,QUOTE” WE ARE NOT LOOKING AT DOZENS OR EVEN HUNDREDS OF LAYOFFS, BUT THOUSANDS.” HE ADDED THAT LAYOFFS WILL NOT BE THE ONLY SOLUTION.
THE CITY IS CURRENTLY $61 MILLION DOLLARS IN THE RED. THE LARGE BUDGET DEFICIT IS A RESULT OF LOWER THAN ANTICIPATED TAX REVENUE, INCREASED LIABILITY OR LEGAL PAYOUTS, MONEY FORWASTE FEES AND MONEY NEEDED TO COVER LOS ANGELES POLICE AND FIREFIGHTER PENSIONS.
IN FACT, SZABO SAID THE CITY’S RISING LIABILITY PAYOUTS TRIPLED IN THE PAST YEAR FROM $112 MILLION TO $320 MILLION. THE CITY IS NOW WORKING WITH THE STATE LEGISLATURE ON A BILL TO POSSIBLY CAP DAMAGES.
PAY RAISES FOR CITY WORKERS ARE SET TO KICK-IN ON JULY 1ST ADDING $250 MILLION IN COSTS. THE CITY COUNCIL IS NOW DISCUSSING VARIOUS CONTRACTS AND POSSIBLE CONCESSIONS, WITH THE UNIONS REPRESENTING PUBLIC EMPLOYEES INCLUDING POLICE, FIRE, TRASH TRUCK DRIVERS AND LIBRARIANS.
MAYOR KAREN BASS ISSUED A STATEMENT, SAYING HER UPCOMING BUDGET WILL MAKE THE BEST USE OF THEIR SCARCE DOLLARS TO BEST SERVE THE PEOPLE OF LOS ANGELES. HOWEVER, SHE WARNED OF FUNDAMENTAL CHANGES IN THE WAY THE CITY OPERATES. BASS URGED THE CHIEF ADMINISTRATIVE OFFICER TO REPORT TO HER WITH PLANS TO QUOTE “ REDUCE SPENDING SIGNIFICANTLY WHILE PROTECTING ESSENTIAL SERVICES. “
PROJECTIONS SHOW THAT REVENUES WILL FALL $320 MILLION SHORT, DUE TO TRADE, IMMIGRATION POLICIES AND THE IMPACT OF THIS YEAR’S DEVASTATING WILDFIRES ON LOCAL TAXES AS WELL AS OTHER COSTS ASSOCIATED WITH THE INFERNOES.
MAYOR BASS WILL RELEASE HER BUDGET ON APRIL 21, WHICH WILL SPELL OUT THE STEEP COST CUTTING MEASURES.
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Bias Summary

Los Angeles faces a projected $1 billion budget shortfall for fiscal year 2025-26, according to City Administrative Officer Matt Szabo, requiring tough financial decisions and potential layoffs.
Szabo highlighted a $61 million starting gap impacted by $315 million in lower tax revenue and rising costs, including $100 million in liability payouts and $275 million to restore the reserve fund.
Mayor Karen Bass emphasized the need for fundamental change in the way the city operates in her preview of the upcoming budget proposal.

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Bias Comparison

Media outlets on the left framed Los Angeles’ $1 billion budget deficit by emphasizing its potential “impact” on Angelenos and the “inevitable” layoffs, highlighting the human cost and potentially increased trash rates, reflecting a concern for the working class.

Media outlets on the right acknowledged the “staggering budget deficit” and “inevitable” layoffs, but put a “positive spin” on Mayor Bass’s response, suggesting she was downplaying the severity, and underscored the city council’s vote to become a “sanctuary city,” implying a connection between this decision and the budget crisis.

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