Bunchy Carter
I'll Take The Money Over The Honey
L.A. city budget shortfall grows to nearly $1 billion, with layoffs 'nearly inevitable'
David ZahniserWed, March 19, 2025 at 1:16 PM PDT
6 min read
Mayor Karen Bass must present her strategy for closing the $1-billion gap by April 21, the legal deadline for her to release her proposed 2025-26 budget. (Irfan Khan/Los Angeles Times)
L.A.'s financial problems exploded into a full-blown crisis on Wednesday, with the city's top budget official announcing that next year's shortfall is now just shy of $1 billion, making layoffs "nearly inevitable."
City Administrative Officer Matt Szabo advised the City Council to focus on cost-cutting measures, including a potential reduction in the size of the workforce, to bring the budget into balance for 2025-26.
Szabo, in his presentation to the council Wednesday, attributed the city's financial woes, in part, to increased spending on legal payouts, which have ballooned over the last few years. Tax revenues have been coming in much weaker than expected — and are expected to soften further in the upcoming budget year, which starts July 1.
Pay raises for city employees that are scheduled to go into effect in the coming budget year are expected to consume an additional $250 million. On top of that, Szabo said, the city needs to put hundreds of millions into its reserve fund, which has been drained in recent months in an attempt to balance this year's budget.
"The severity of the revenue decline, paired with rising costs, has created a budget gap that makes layoffs nearly inevitable," he said. "We're not looking at dozens or even hundreds of layoffs, but thousands."
Mayor Karen Bass must present her strategy for closing the $1-billion gap by April 21, the legal deadline for her to release her proposed 2025-26 budget. At this point, neither she nor the council are willing to wait.
"Because of the severity of the gap we are facing, the mayor has made it clear we need to take action now," Szabo told the council.
Minutes after Szabo's presentation, council members went behind closed doors to take a fresh look at the city's contracts with a wide array of unionized public employees — police officers, firefighters, trash truck drivers, librarians, park maintenance workers and many others.
Councilmember Katy Yaroslavsky, who heads the budget committee, said the council will need to look at the possibility of asking unions representing city workers to defer the scheduled raises or make other concessions.
"I think everything needs to be on the table," she said in an interview.
David Green, president and executive director of Service Employees International Union Local 721, called Szabo’s remarks “short-sighted and irresponsible.”
“Before laying off employees, the city needs to take a hard look at reining in spending on private outside contractors,” Green said.
