July 19, 2025 The Newspaper Serving LGBT Los Angeles

L.A. Faces Billion-Dollar Budget Crisis: Thousands of Layoffs “Nearly Inevitable”

City Leaders Weigh Harsh Cuts as L.A. Confronts Historic Budget Shortfall

Los Angeles is facing a severe financial crisis, with its projected budget shortfall for the upcoming fiscal year approaching $1 billion, according to city officials. LA Controller Kenneth Meijia has been warning us of a severe budget shortfall since last year. On Wednesday, City Administrative Officer Matt Szabo warned the City Council that layoffs in the thousands are now “nearly inevitable” as the city struggles to address declining revenue and soaring expenses.

The budget deficit, one of the largest in recent city history, has been driven by weaker-than-expected tax revenues, escalating pension obligations, increased liability payouts, and growing personnel costs. Officials are now considering service cuts, workforce reductions, and possible deferrals of union-negotiated raises for police officers, firefighters, and other city employees.

Szabo, who oversees city finances, told the council that the city’s general fund revenues have fallen $315 million below projections, while pension costs for firefighters and police officers have surged by $100 million. Additionally, liability claims—one of the biggest drivers of the budget shortfall—have hit a record $247 million this fiscal year, while next year’s budget only allocates $87 million to cover legal settlements.

With the city’s financial situation rapidly deteriorating, Szabo did not mince words about the severity of the crisis.

“We are not looking at dozens or even hundreds of layoffs, but thousands,” Szabo said.

Despite the grim outlook, he emphasized that layoffs alone cannot close the budget gap. Instead, city leaders must consider drastic restructuring of services, potential hiring freezes, and new cost-cutting measures.

Mayor Karen Bass acknowledged the crisis and called for a complete overhaul of how Los Angeles structures its budget rather than simply making incremental cuts.

“For too long, the City’s budget and operations have simply been based on the way the City operated in the previous year,” Bass said in a letter to the Chief Administrative Officer. “This year, we must deliver fundamental change.”

Bass has directed city officials to develop proposals to slash between $500 million and $900 million in spending for the 2025-26 fiscal year, which begins July 1. She has also ordered recommendations for structural budget reforms, including:

  • Reducing liability costs associated with lawsuits
  • Reevaluating the number, structure, and responsibilities of city departments
  • Cutting departmental contract expenses
  • Finding payroll and benefit savings
  • Preserving the city’s reserve fund

City officials have warned that broader economic instability, potential federal funding shortfalls, and wildfire-related expenses will likely make balancing the budget even more difficult.

The recent wildfires in the Palisades have increased emergency response costs while also reducing property tax revenues from damaged homes and closed businesses. Meanwhile, the city’s financial outlook remains uncertain amid fluctuating federal policies, declining office occupancy rates, and post-pandemic economic shifts.

However, as the city moves into the 2025-26 budget cycle, officials are preparing for difficult and painful choices. Bass emphasized that no program or department should be considered immune from budget reductions.

“We must leave no stone unturned,” she said. “If a program or department can operate better, or if they should not operate at all, we must make those changes—now.”

With service cuts, layoffs, and restructuring now looming, the debate over how to close Los Angeles’ massive budget shortfall is only beginning. The City Council must approve the final budget for 2025-26 before July 1.

in NEWS
Related Posts

Unmasking ICE: Senators Push for Visible IDs After Secretive LA Immigration Raids

July 8, 2025

July 8, 2025

Bill Requires Federal Agents to Display Visible Identification During Raids U.S. Senators Alex Padilla (D-Calif.) and Cory Booker (D-N.J.) on...

Bacio di Latte’s Beverly Hills Gelateria Debut Blends Italian Tradition with California Cool

July 8, 2025

July 8, 2025

Gelateria Features In-House Gelato, Espresso Drinks, and Decadent Signature Flavors Bacio di Latte has officially opened its latest U.S. flagship...

Housing for Health Chief Appointed to Lead Unified Homeless Services Department

July 8, 2025

July 8, 2025

Veteran Housing Advocate to Oversee Streamlined LA County Services The Los Angeles County Board of Supervisors on Tuesday confirmed the...

Rainbow Crosswalk at Pulse Memorial Could Be Removed Under New Federal Rules

July 8, 2025

July 8, 2025

Trump Administration’s Program Urges States to Eliminate “Non-safety” Road Art, U.S. Transportation Secretary Sean Duffy issued a bizarre order for...

Brentwood Feels Impact as Feds Slash Office Leases Across Los Angeles

July 8, 2025

July 8, 2025

New Tracker Reveals Over 70,000 Square Feet Cut in 2025 Alone Los Angeles County’s office market is experiencing a fresh...

Interview: The Dinah Creator Mariah Hanson on Legacy, Change, and the Future of Queer Celebration

July 8, 2025

July 8, 2025

After 34 Groundbreaking Years, Hanson Reflects on Joy, Power, and Her Final Dinah  We spoke with Mariah Hanson, the creator...

Shore Hotel: A Local Destination for Summer Fun

July 8, 2025

July 8, 2025

Bring on all things summer. Walking or biking along Santa Monica Pier, you might find yourself taking a pause at...

One Last Bite: La Novia Bids Farewell with Final Pop-Up at Cardinale du Vin

July 8, 2025

July 8, 2025

Inventive Latin-Asian Pop-up Serves Seasonal Small Plates for One-Night-Only La Novia, the pop-up kitchen known for its inventive Latin-Asian flavors,...

Governor Newsom Unveils Fast-Track Rebuilding Plan on Six-Month Anniversary of Palisades Fire

July 7, 2025

July 7, 2025

State Clears Over 5.5 Billion Pounds of Debris From Fires Ahead of Schedule Marking six months since the devastating Eaton...

Soprano Golda Zahra Returns to BroadStage For a One-Night-Only Musical Celebration

July 7, 2025

July 7, 2025

Hailed as “the rising star of the opera world” by The Hollywood Times, internationally acclaimed soprano Golda Zahra makes her much-anticipated return to BroadStage in...

Transform Your Life: The Free Virtual ONENESS GLOBAL SUMMIT Debuts July 18-20, 2025

July 7, 2025

July 7, 2025

The ONENESS GLOBAL SUMMIT, a transformative three-day virtual event, is coming, July 18-20, 2025, offering participants worldwide a free opportunity...

July 4 ICE Raid on WeHo Car Wash Ends in Deportation of Local Resident

July 7, 2025

July 7, 2025

Longtime West Hollywood Worker with Family’s Rent Money Taken in Raid A group of masked men and women, without official...

Bel Air and Holmby Hills Estates Lead May’s List of America’s Top 10 Home Sales

July 7, 2025

July 7, 2025

LA Claims Two of the Top Three Luxury Home Sales Last Month expensive residential transaction in the U.S. for May,...

Newhart Family Lists Beloved Comedy Legend’s Townhouse in Century City

July 7, 2025

July 7, 2025

Late TV Star’s Custom Townhouse, Filled With Memories and Holiday Cheer  A luxurious Century Woods townhouse once home to comedy...

Caitlyn Jenner’s Friend and Former Foundation CEO Dies in Malibu ATV Crash

July 7, 2025

July 7, 2025

ATV Plummeted 350 Feet After Rear-Ending Vehicle in Malibu Sophia Hutchins, former CEO of the Caitlyn Jenner Foundation and longtime...