Los Angeles, CA, has its share of problems, from the ongoing homeless crisis to the more recent Palisades fire that is estimated to have cost more than $250 million in damages. It’s no wonder LA is facing a budget crisis. Mayor Karen Bass said the city faces an $800 million deficit and is looking at laying off 1,647 staff members, as well as seeking a bailout from the state. Part of the blame, she says, rests on the Donald Trump administration and the economy.
LA Layoffs Coming Soon
“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.”
LA employs about 61,455 people, so a layoff of 1,647 staff members equates to a reduction of about 2.7%. On average, the city pays its employees $135,355 per year, which as The Center Square pointed out, is “more than double the median citywide salary of $57,247 per year.”
Recently, the mayor gave a state of the city address and said the nearly $1 billion deficit is, in part, due to $250 million increase in labor costs from new union contracts last year as well as $282 million from wildfire losses and spending. She added, “Liability settlements have tripled from backed up lawsuits during the pandemic and uncapped damages.”
ABC Eyewitness News obtained data from the controller’s office that showed the city paid out just over $91 million from lawsuits against LA in 2022, then $166 million in 2023, and it escalated in 2024 to $247 million.
Between 2023 and 2024, the city payout came out to $546 million and about half of that came from lawsuits against the police department, about $222 million, the outlet reported. “Nearly 50% of the money that the LAPD paid out in lawsuits had to do with allegations of excessive use of force.” Of the more than 1,600 proposed layoffs, Bass wants to cut 400 directly from LAPD civilian positions.
The city’s Public Works Bureau of Street Services had $74.8 million in lawsuits, which include issues for poor roads allegedly causing damage to cars. And the Bureau of Sanitation has had to pay out $74.3 million. The mayor plans to have more than 100 layoffs each in other departments, including sanitation and street services.
Bass is sure to experience backlash for the layoff announcements. David Green, president of the local service employees union, said, “We’re always glad to have a conversation about how to make things more efficient in the city of LA, but that shouldn’t include laying off the folks that work. I’m going to push back and fight against every single one of these layoffs. These are folks who are frontline workers serving the community every day.”
Other issues have contributed to loss of revenue for LA. “The impact of remote work, automation, artificial intelligence and online sales will continue to erode traditional sources of City tax revenue,” City Controller Kenneth Mejia wrote. “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.”
Furthermore, 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 projection due to tariffs and ‘pullback in entertainment industry.’”
Hollywood is not as happy with LA as it once was. According to Filmtake, TV production in the area plunged nearly 20% in 2023, and its share of domestic production fell from 23% in 2021 to 18% in 2023. Tax rebates are one of the biggest contributors. “The exodus of productions from Los Angeles can be traced back to its inability to compete in the tax incentive arms race,” the outlet explained. “California’s Film & Television Tax Credit Program offers a 20% base credit with a $330 million annual cap – far less competitive than Georgia’s 30% transferable credit or Canada’s advantageous exchange rates. Notably, California excludes above-the-line costs, such as salaries for actors and directors, from qualifying for incentives, putting it at a further disadvantage.”
Mayor Bass recognizes the loss of Tinsel Town and, during the state of the city address, said, “And we will also streamline the permitting process to make it easier to film in LA. So to our leaders in Sacramento – and to our local industry leaders here – I say, — let’s bring Hollywood back.”
Bass visited the Capital this week to try and get financial help from the state. She wants the state to pass legislation to help the city with liability costs. Currently, fire and police enforcement officers are not being cut. The proposed budget will go to the city council soon and the final budget approval is scheduled for June 1.
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