The city of Los Angeles is facing a challenging financial situation, as Mayor Karen Bass has proposed laying off up to 1,600 city employees in the upcoming fiscal year. This announcement was made during her recent State of the City address, where she highlighted a staggering budget deficit of nearly $1 billion for the 2025-26 fiscal year.
During her address, Mayor Bass directly addressed the city’s workforce, acknowledging their invaluable contribution while expressing her regret over the proposed layoffs. "Make no mistake, you are the city's greatest asset," she stated, emphasizing the gravity of the decision. However, she also affirmed that the layoffs were regarded as a measure of "absolute last resort."
In the days following the address, Bass indicated that the city should prepare for serious funding cuts and delays in various programs, although she assured that essential services such as the Los Angeles Police Department and the Fire Department would not be affected by the layoffs. "I cannot cut the money to policing," Bass explained. "But I have increased and built up the money for community safety because I believe in a comprehensive approach." This reflects the city’s commitment to balancing safety needs with budgetary constraints.
The proposed layoffs and impending budget cuts stem from multiple factors contributing to the city's significant fiscal shortfall. Overspending, liability payouts, labor contracts, and lower-than-expected tax revenues are among the primary issues cited by Mayor Bass. "Cities like ours are going through challenging economic times across the nation," she said, attributing the budget deficit to national economic turmoil and a slowing economy.
In detail, the city’s business and sales tax revenues have declined, while approximately 35% of the city’s revenue relies on property taxes. The general fund revenue is projected to be around $8 billion, falling short of the anticipated $8.14 billion. Additionally, the city has witnessed a spike in liability payouts, which have increased from an average of $100 million per year to an alarming $300 million this fiscal year. Labor contracts have also risen significantly by $259 million, further straining the budget.
To tackle the growing deficit, Mayor Bass is looking to the California Legislature for assistance. She plans to travel to Sacramento later this week to lobby for additional funding that could help alleviate the city’s financial challenges. "We are hopeful for support from our state lawmakers," she stated, highlighting the necessity for collaborative efforts to stabilize the city’s finances.
Mayor Bass's proposed budget for Los Angeles totals $13.95 billion. In addition to the potential layoffs, the budget also aims to eliminate 1,074 vacant positions, defer capital projects, reduce funding within the mayor’s office, and consolidate four city departments. While spending on homelessness will see slight reductions, it remains a significant focus of the budget.
In light of recent decisions to reallocate funds away from the Los Angeles Homeless Services Authority (LAHSA) at both city and county levels, there are discussions about adjusting the city’s approach to homelessness. The county Board of Supervisors has proposed establishing its own department to oversee regional homeless services, effectively defunding LAHSA. This decision comes in response to criticisms regarding inefficiency and lack of transparency within the agency.
The new county agency is expected to be operational by January 1, with all funding shifted from LAHSA to the new department by July 1, 2026. This major change signifies a strategic shift in how Los Angeles plans to tackle the ongoing homelessness crisis.
During her State of the City address, Mayor Bass also discussed the city’s ongoing rebuilding efforts, particularly in Pacific Palisades, which suffered extensive damage from January’s wildfires. She mentioned a decrease in homelessness rates, rapid recovery efforts from the wildfires, and a reduction in violent crime, illustrating her administration's commitment to addressing key issues facing the city.
However, Bass acknowledged the city's significant challenges, including the housing crisis, public safety concerns, and the impacts of climate change. "We are not here to gloss over difficulties," she stated. "We are here to make real change, reforming how the city works to better serve everyone who calls L.A. home."
Additionally, Bass emphasized her support for immigrants in Los Angeles, a statement that resonated strongly with the audience, earning her a standing ovation. This reflects the city’s inclusive approach amidst ongoing budgetary concerns.
This is a developing story, and further updates will be provided as new information becomes available.
