Los Angeles is grappling with a nearly $1 billion budget shortfall for the 2025-2026 fiscal year, according to the city’s top financial advisor, Matt Szabo. The budget crisis may force Mayor Karen Bass to make significant cuts to city departments and lay off thousands of workers. Szabo addressed the City Council on Wednesday, emphasizing that layoffs alone will not solve the issue, though they appear inevitable.
The financial troubles are partly due to increased spending on legal payouts and weaker-than-expected tax revenues. Pay raises for city employees, set to take effect in the coming fiscal year, will add another $250 million to the budget. Additionally, the city needs to replenish its reserve fund, which has been depleted in recent months.
Mayor Bass has until April 21 to present her strategy for closing the budget gap. She has indicated that no department or program will be exempt from potential cuts or reorganization. The Los Angeles Times reports that the City Council is already reviewing contracts with unionized public employees, including police officers, firefighters, and other essential workers, to explore possible concessions.
Councilmember Katy Yaroslavsky, head of the budget committee, stated that all options must be considered, including asking unions to defer scheduled raises. David Green, president of Service Employees International Union Local 721, criticized Szabo’s remarks as “short-sighted and irresponsible,” urging the city to cut spending on private contractors first.
The financial crisis is exacerbated by previous commitments to pay raises and benefits, which have already led to the elimination of about 1,700 vacant positions. City leaders are also exploring ways to generate additional revenue, such as increasing fees for public services.
Recent Comments