After giving her State of the City address on Monday, L.A. Mayor Karen Bass released her annual budget, which proposed laying off 1,647 city workers and closing some city departments in the fiscal year that starts July 1. Dwindling revenues and increasing costs have led to a nearly $1 billion shortfall, and it's the most austere budget since the city was wracked by the 2008 recession.
What's led to the shortfall? An increase in costs, including a tripling of liability payments, and the unexpected expenditures from the Palisades Fire, among other things. There's also a significant decline in business, sales, hotel and property taxes, as well as the uncertainty of President Donald Trump's tariffs.
Which departments will be most affected? The layoffs would occur over a range of departments and affect city services across L.A., in addition to eliminating a number of vacant positions. The city currently employs 32,405 people.
Any good news? The mayor did highlight some victories, including what she said was a 10% reduction in street homelessness, 14% drop in homicides and the Palisades Fire recovery.
Facing a nearly $1 billion shortfall driven by dwindling revenues and increasing costs, Los Angeles Mayor Karen Bass on Monday proposed laying off 1,647 workers and closing some city departments in the fiscal year that starts July 1.
It's the most austere budget since the city was wracked by the 2008 recession.
In her State of the City speech delivered shortly before the budget was released, Bass addressed city workers directly, saying "you are the city’s greatest asset... my proposed budget, unfortunately includes layoffs, which was a decision of absolute last resort."
The budget proposal must still go before the City Council for a vote.
City officials said the mayor was contemplating as many as 3,500 layoffs, but was able to cut that in half by, among other things, deferring capital projects.
There are currently about 38,000 city positions, not counting the departments of water and power, harbor and airport. In all, the city employs 32,405 people.
The layoffs would occur across a range of departments and affect city services. The proposal would also eliminate several vacant positions.
Some victories
In a wide-ranging speech, Bass also sought to highlight victories, saying there was a 10% reduction in street homelessness, a 14% drop in homicides and what she described as the "fast" pace of recovery from the Palisades Fire.
"The state of our city is this: homelessness is down, crime is down," said Bass. "These are tough, tough challenges and they show we can do so much more."
She went on to announce new action to expedite the permitting process for fire victims, establishing a self certification program and calling on the City Council to waive all plan check and permit fees.
The move drew praise from Larry Vein with community initiative Pali Strong.
“We are so delighted to see that the fees are being waived for permits. We’ve been asking for some relief in that area,” he said. “And we are super excited that it's what’s called self certification on the plans. That is going to be huge.”
The mayor also looked forward to the Olympics in 2028, saying current investments will make life better for Angelenos in the future.
Strong reactions
Labor leaders immediately denounced the proposed layoffs.
“We’re going to fight for every single one of these city jobs. One layoff is too many,” said David Green, president of the Service Employees International Union, Local 721, which represents 10,000 city workers.
He warned the ramifications of the layoffs would be broad.
“These are folks who are frontline workers serving the community every day,” said Green, whose union represents tree trimmers, sanitation workers and trash truck drivers, among others.
Ironically, the layoffs are being driven in part by increased labor costs resulting from union contracts signed just last year. Those contracts will cost the city an extra $250 million in the coming year, according to city officials.
A number of City Council members expressed resignation that the layoffs were inevitable.
Councilmember Bob Blumenfield 85% to 90% of the city’s budget is labor costs.
“So if you have this kind of huge deficit, it is almost impossible to solve for that deficit without affecting labor costs,” he said.
Liability payments
Liability payments have also ballooned and are costing the city more. Legal payouts have averaged $100 million annually for the past 10 years, according to city officials.
The new proposed budget set aside $187 million for liability claims against the city — more than twice as much as had been budgeted in recent years — but this is still well below the anticipated $320 million in liability expenses to be paid this fiscal year.
Officials blamed costlier jury verdicts and legal settlements with people who sued the city over such things as police use of force and internal staff harassment.
The unexpected, significant costs of fighting the Palisades Fire, as well the aftermath, have also contributed to budget pressures.
Meanwhile, as costs increase, revenues are on the decline.
Business and sales taxes are both down, according to city officials, while hotel and property taxes, which make up 35% of revenues, are expected to be below projected growth.
President Donald Trump’s tariffs are also expected to hit L.A. hard, adding to the fiscal uncertainty.
General fund revenue is projected to be $8 billion — down from the forecasted $8.14 billion.
Homelessness, police and fire
Mayor Bass gives the State of the City address on April 21, 2025.
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Screenshot of LA Cityview 35 livestream
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Under the mayor’s plan, the budget for her signature Inside Safe homelessness program would remain the same, but spending on helping people on the streets would be slightly lower, according to city officials.
The plan also forecasts a smaller Police Department, which has been shrinking in part because evidence indicates fewer people want to become police officers than in previous years.
The LAPD is expected to finish this fiscal year with 8,733 officers. The mayor’s plan projects it will end the next fiscal year with 8,639 officers.
In the wake of the Palisades Fire, the Fire Department will see an increase of funding by 12.7%, according to city officials. The plan adds 277 new positions and calls for more paramedics, mechanics and fast response vehicles — pickup trucks with a small water tank, hose and medical supplies that can respond to an increasing number of calls for help from unhoused people.
Bass’ proposal also calls for consolidating four city departments — the departments of Aging, Economic, and Workforce Development, and Youth Development will be consolidated under the Community and Family Investment Department.
In addition, the plan calls for eliminating the Health Commission, which is an advisory body. It would also get rid of the Innovation and Performance Commission, as well as the Climate Emergency Mobilization Commission.
The mayor’s budget also maintains a 6% reserve fund, above the 5% required by city policy.
Bass said she will travel to Sacramento this week in hopes of getting some financial help from state officials, according to city officials.
LAist reporter Jordan Rynning contributed to this story.
