Mayor Bass' proposed budget includes 1,600 layoffs amid deficit

LOS ANGELES (KABC) -- The city of Los Angeles could lay off 1,600 employees in the upcoming fiscal year, Mayor Karen Bass proposed in her budget.

Bass initially announced the possibility of layoffs during her State of the City address on Monday. She said during the address the city faces a nearly $1 billion deficit in the 2025-26 fiscal year.

"I would like to take a minute to address our city workforce directly," Bass said during her State of the City address. "Make no mistake, you are the city's greatest asset. ... But, I want to be straight with you. My proposed budget - unfortunately - includes layoffs, which is a decision of absolute last resort."

Over the weekend, Bass said the city should expect serious cuts and program delays, and some programs could also be put on hold.

One local labor leader says his union - which represents 10,000 city workers -- plans to fight back.

"Show us the money, we want to look at the numbers and look at every single dollar, this shouldn't be the first-place people go, to lay off city workers, providing valuable city services," said David Green, president of SEIU Local 721.

The layoffs are not expected to impact sworn Los Angeles police officers and firefighters. The layoffs will impact civilian positions at the departments.

"As I've said, I cannot cut the money to policing, but what I have done is increase and build up the money to community safety because I happen to believe in a comprehensive approach," the mayor said in the speech.

In light of the wildfires in January, the LAFD budget is expected to go up 12.7% and include 227 new positions.

What led to the L.A. city budget deficit?

The deficit is a result of overspending, liability payouts, labor contracts and lower-than-anticipated tax revenues.

"Cities like ours are going through challenging economic times across the nation," Bass said. "Turmoil and uncertainty from Washington and a slowing economy are causing lower revenue projections to the tune of hundreds of millions of dollars."

The city's business tax and sales tax have slowed; 35% of the city's revenue comes from property taxes. The general fund revenue is at $8 billion, but it was projected to be at $8.14 billion.

In the past, Los Angeles averaged $100 million per year in liability payouts. However, this fiscal year, the city liability payouts were $300 million, according to Public Works Commissioner Matt Szabo.

Labor contracts increased by $259 million.

"Liability settlements have tripled from backed up lawsuits during the pandemic in uncapped damages," Bass said. "Combined with personnel costs and, of course, the fires and rebuilding -- all together, Los Angeles, we have a very difficult budget to balance."

Is there a way to prevent the budget deficit?

Bass is hoping to lower the L.A. city budget deficit by getting help from the California Legislature.

She is headed to Sacramento later this week to ask lawmakers for additional funding in order to curb the shortfall.

What else is in L.A. mayor's proposed budget?

Bass' proposed budget is $13.95 billion.

The proposal also includes eliminating 1,074 vacant positions in addition to the layoffs.

The proposal also includes deferring capital projects, reducing funding in the mayor's office and consolidating four city departments.

Homeless spending would be slightly less but is still a big part of this proposed budget.

Where does funding for homelessness stand in L.A.?

With a recent decision to move funding away from the Los Angeles Homeless Services Authority (LAHSA) at both the city and county level, Bass and the City Council may also consider adjusting their approach to resolve the homelessness crisis.

The county Board of Supervisors advanced a proposal to create its own department to manage regional homeless services, effectively defunding LAHSA -- a joint city-county agency criticized for inefficiency, waste and lack of transparency. LAHSA officials said the agency grew rapidly in recent years and has since taken steps to address those issues.

The new county agency is expected to be in place by Jan. 1, with all funding pulled from LAHSA and transferred to the new department by July 1, 2026.

What else did Bass highlight in her State of the City address?

Bass spoke in the Council Chamber at City Hall midday. The mayor discussed the city's rebuilding efforts, largely focusing on Pacific Palisades, which was devastated by January's wildfires. She touted a drop in homelessness, quick wildfire recovery efforts and a decrease in violent crime.

"The aftermath of this disaster weighs on our city, which already had huge challenges before us," she said. "We feel it every day. The strain of the housing crisis, the tragedy of the homelessness crisis. We worry about public safety and the unpredictability of our streets. We worry about a changing climate that brings in increasing weather extremes, and we worry about rising costs and economic uncertainty."

"But I want you to know that I see it. We are not here to gloss over difficulties. We are here... to make real change."

That entails reforming how the city works and rebuilding a city that "works better for everyone that calls L.A. home," the mayor said.

Bass highlighted during her speech bureaucratic inefficiencies slowing down services, saying "the system is broken."

During her speech, Bass addressed immigration, saying the city will always stand with the immigrants in Los Angeles. The statement received a standing ovation from the people in the chamber.

City News Service contributed to this report.