With an $800M deficit and layoffs coming, LA Mayor Bass seeking bailout

(The Center Square) - Los Angeles Mayor Karen Bass announced Monday the city faces a $800 million deficit, plans on laying off 1,647 staff, is seeking a state bailout and has “identified new revenue.”

Bass blamed the Trump administration and the economy for falling revenue.

“Cities like ours are going through challenging economic times across the nation,” said Bass. “Turmoil and uncertainty from Washington and a slowing economy are causing lower revenue projections.”

With 61,455 employees, 1,647 layoffs equate to a workforce reduction of 2.7%. With just over $8.3 billion paid out in payroll last year, the city pays its employees an average of $135,355 per year, or more than double the median citywide salary of $57,247 per year.

This means the announced layoffs would only cover about a quarter of the at least $800 million deficit.

During her State of the City address Monday, Bass said she is traveling to Sacramento to seek a state bailout, but if the state is either unwilling or unable to fund such a bailout amid falling sales and corporate tax revenue and employment, more layoffs could be necessary.

“The city attorney and I will be in Sacramento this week to meet with legislative leaders and advocate for resources while also working to manage the increasing liabilities,” said Bass.

City Controller Kenneth Mejia has been warning the city is “going broke” since the middle of last year — the city’s budget was in crisis even before the January fires.

Mejia says the city’s revenue for the current fiscal year is expected to come in $140 million below projections, while spending is $300 million higher than expected.

Mejia estimates revenues for the coming fiscal year will be $79 million lower than the updated projections for the current year due to dampening economic projections due to tariffs and “pullback in entertainment industry.”

“The impact of remote work, automation, artificial intelligence and online sales will continue to erode traditional sources of City tax revenue,” wrote Mejia. “Federal grants (which significantly increased under the last Administration) are expected to drop given the winding down of previous COVID recovery funds and the uncertainty regarding federal funds from the new Administration.”

Bass’s budget proposes spending $13.92 billion against $13.95 billion in revenue, including $8.06 billion assumed in general receipts revenue. Should general receipts be $7.89 billion as expected by Mejia, the city would fall well short of its budget, necessitating further cuts.

Notably, the proposed budget does not cut the number of sworn firefighters or police officers.