The top financial advisor for Los Angeles says the city is facing a nearly $1 billion budget shortfall heading into the 2025-2026 fiscal year.
The budget crisis means the city’s already embattled Mayor Karen Bass will inevitably need to make cuts to departments and layoff city workers, Administrative Officer Matt Szabo told the City Council Wednesday.
“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.”
Szabo shared a chart showing some of the city’s largest areas of concern.
- Revenue Gap – $315 million
- Reserve Restoration – $275 million
- Liability Claims (increase) – $100 million
- Pensions – $100 million
- Solid Waste Fee Subsidy (increase) – $80 million
- Starting Gap – $61 million
Szabo attributed much of the crisis to the increased spending on legal settlements, emergency response costs related to the Palisades Fire and the downward national economic trend.
“Immediate spending reductions are required, and this body needs to prepare for further reductions if revenues continue to decline,” Szabo said.
The mayor responded to the news saying that everything was on the table when it came to potential cuts.
“We must leave no stone unturned. We must consider no program or department too precious to consider for reductions or reorganization,” Bass said.
The mayor has until April 21 to present her new budget and is expected to meet with city labor unions, including police and firefighters, in the meantime to discuss new contracts.
