Los Angeles proposes $13.95B budget with severe position cuts to address $900M deficit

The Los Angeles City Council convened on May 2, 2025, to discuss the proposed budget for the fiscal year 2025-2026, which totals $13.95 billion. The budget anticipates a modest growth of 0.36% in the general fund, while special fund categories are expected to see more significant growth. However, this increase does not alleviate the city's pressing financial challenges, as many special fund revenues are tied to the same economically sensitive sources as the general fund, such as sales tax.

City officials highlighted a projected deficit exceeding $900 million, driven by rising liability claims and increasing operational costs. The budget allocates $200 million specifically for liability settlements, reflecting a significant rise in claims that may become a new norm. Additionally, costs associated with payroll, benefits, and pensions are anticipated to rise, compounded by economic volatility affecting the city’s revenue streams.

To address the deficit, the budget proposes several measures, including the elimination of 1,600 positions, which is expected to save approximately $282 million. This includes cuts to both filled and vacant positions, with efforts made to preserve skilled roles across departments. The council has also identified new revenue sources, such as a recently implemented trash fee, and has deferred certain capital projects to generate savings.

City officials expressed concern over the potential impact of layoffs on employees, emphasizing that discussions about position cuts are stressful and undesirable. They reassured that no layoffs would occur until the new fiscal year and that the council would explore all options to mitigate job losses, including seeking state funding and negotiating with labor partners.

The meeting underscored the city's commitment to balancing the budget while navigating significant financial hurdles, with a focus on preserving essential services and positions. The council plans to continue discussions on the budget and its implications in the coming months, aiming to finalize a plan that addresses both fiscal responsibility and workforce stability.