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Los Angeles Mayor Karen Bass portrayed the disastrous financial situation in Los Angeles in a preview of the budget released Wednesday.
Bass said the 2025-2026 budget proposal would “convene a fundamental change in the way the city operates. In a letter to Matthew Zabo of the Los Angeles City Administration, Bass directed that it plans to save $500 million to $900 million for the structural budget costs for the 2025-26 fiscal year.
“For too long, the city’s budget and operation has only been based on how the city operates last year,” Bass said in a statement. “This year we must make a fundamental change in the way cities operate, and we must budget based on how cities can best serve the people of Los Angeles and spend their rare budget dollars the best.
“Since taking office two and a half years ago, I have faced some of the city’s toughest challenges by working to change the broken status quo at City Hall. The need for structural drastic reforms in the city’s budget and operations is at the heart of my office’s work to continue drafting the budget for fiscal year 2025-26.”
The upcoming budget year will begin in July.
Szabo told City Council on Wednesday that nearly $1 billion in cuts would be “almost inevitable” layoffs.
Citing the economic trends of decline, Bass’ Office said the 2025-2026 budget revenue is projected to be hundreds of millions of dollars less than expected. The devastating palace fire, which included payment of liability and emergency response and recovery, was one of the substantial costs cited by Bass. Her letter also points to a decline in revenue due to a decline in property tax valuations on homes and businesses lost in the fire service in January, one of California’s most destructive records.
According to a Bass letter, the uncertainty over federal funds added to Bass’ concerns and “continuously changing tariff proposals” added to budget concerns.
“For too long, the city’s budget and operation is simply based on how the city operates last year,” Bass said in her letter. “This year, we must make a fundamental change in the way cities operate, and we must budget based on how cities can best serve the people of Los Angeles and how they can best spend their rare budget dollars.”
The letter urged the city’s chief budget officers to consider proposals to reduce liability costs, reassign services to focus on the city’s most important services, reduce departmental contract costs, achieve salaries, save savings and create structural reforms.
“We don’t turn the stones over,” Bass said. “We must consider that programs, departments and departments are not too valuable to consider for reductions or reorganizations, and at this time of economic uncertainty it is whether the urban program or department is operating as efficiently and effectively as possible.
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