Blue State Blues: L.A. City Budget Shortfall Grows to Nearly $1 Billion, With Layoffs “Nearly Inevitable”
20th March 2025
L.A.’s financial problems exploded into a full-blown crisis on Wednesday, with the city’s top budget official announcing that next year’s shortfall is now just shy of $1 billion, making layoffs “nearly inevitable.”
City Administrative Officer Matt Szabo advised the City Council to focus on cost-cutting measures, including a potential reduction in the size of the workforce, to bring the budget into balance for 2025-26.
Szabo, in his presentation to the council Wednesday, attributed the city’s financial woes, in part, to increased spending on legal payouts, which have ballooned over the past few years. Tax revenues have been coming in much weaker than expected — and are expected to soften further in the upcoming budget year, which starts July 1.
Pay raises for city employees that are scheduled to go into effect in the coming budget year are expected to consume an additional $250 million. On top of that, Szabo said, the city needs to put hundreds of millions into its reserve fund, which has been drained in recent months in an attempt to balance this year’s budget.
As Margaret Thatcher famously said, the problem with socialism is that you eventually run out of other people’s money.