As the city prepares for the 2026 World Cup and the 2028 Olympics, it will have to cut its spending significantly to close the city’s budget shortage.
The city of Los Angeles is facing a $1 billion budget deficit projected for the 2025-2026 fiscal year, leading Mayor Karen Bass to call on layoffs of 1,647 city workers in the $13.95 billion spending plan announced Monday.
Los Angeles is tackling several issues, including declining revenue, higher liability, and increased pay costs. The sacrifices from the January fire that destroyed Los Angeles also added to the increase in urban costs.
“This budget will continue to advance key challenges such as reducing homelessness and crime, and continue to invest in promoting driving change, including balancing urban finances and common sense integration of related sectors,” Bass said in a statement. “Homelessness is declining. Crime is declining. These are tough challenges and our progress shows that we can do anything in this city with its endless possibilities.”
City Administrator Matt Sabo warned the city council on March 19 of the shortage. He said the city faces a revenue gap of $315 million.
In her latest speech on April 21, Bass spoke directly to the city’s workforce, saying layoffs were the last resort.
“Don’t make mistakes. You are the city’s biggest asset. Every day you work in the people of Los Angeles, dedicated service in often challenging working conditions.
The mayor’s budget also suggests eliminating currently unfilled city positions, according to city controller Kenneth Meziah. Bus said she and her Los Angeles city attorney will be in Sacramento this week to meet with legislative leaders and defend their resources.
According to Mejia, the chopping block has 403 civilians from the Los Angeles Police Department, 262 Department of Transport, 159 people in addition to others, as well as the Department of Health.
Mejia points out that between 2020 and 2023, legal payments reached nearly $472 million. He also said the proposed budget would require approximately $6.45 billion in discretionary funds or unlimited funds that could be used for anything.
Additionally, city employees are expected to receive a $250 million salary increase agreed between 2025 and 2026, according to Szabo.
Meanwhile, the city’s reserve fund is gearing up to hundreds of millions of people to balance its budget. Mejia predicts that general fund revenues will decline by $73 million. He later revised the number to nearly $300 million.
Mezia is a critic of the city’s financial management. In 2024, he highlighted the issue.
“We are all painfully aware, and with a lack of income, liability payments and departmental overreports, the city has demanded that the deficit year be over and reduce nearly half of the city’s general fund reserves,” he said in his 2024 financial report.
Bass’ budget requires four urban sectors to integrate into communities and investments for families. The sectors to be excluded include the sectors of aging, economic and labor development, and youth development.
The plan allocates $103.7 million for 227 new fire department jobs, half of which will become firefighters.
Los Angeles will host the 2026 World Cup and the 2028 Olympics. The Olympics are touted as a revenue generator for the city, but the University of Southern California (USC) says the cost of new development before the game will surpass expected revenue.
USC also said the game would increase the cost of living in Los Angeles.
Research shows that cities that host the Olympics are generally losing money. The game costs around $7 billion for the city, according to the 2024 annual report by the city’s organising committee for the 2028 Olympics and Paralympics. If these costs don’t overrun, they will be their first host since 1984 when they held the Olympics.
Angelenos will have the opportunity to provide public comment to the Budget and Finance Committee on April 28 at Vannuis City Hall at 1pm on April 25th and at City Hall in Downtown Los Angeles on April 28th.
The city council must review and approve the budget by June 1st.
