Mayor Karen Bass said today that her budget proposal for next year will “deliver fundamental change in the way the City operates,” and directed the Chief Administrative Officer to report to her with strategies to reduce spending significantly while protecting essential services.
The question is… will it deliver the change the city needs?
“For too long, the City’s budget and operations have simply been based on the way the City operated in the previous year. This year, we must deliver fundamental change in the way the City operates and base our budget on how the City can best serve the people of Los Angeles and to best use their scarce budget dollars,” Mayor Bass said in her letter.
“Since taking office two-and-a-half years ago, I have confronted some of our city’s toughest challenges by working to change the broken status quo at City Hall,” Mayor Bass added, noting reductions in homelessness and crime and budget reforms made last year. “The need for structural sweeping reform of the City’s budget and operations has only intensified, and changing the status quo is at the heart of my office’s work as we continue to draft my proposed budget for the 2025-26 fiscal year.”
Downward economic trends make it so revenues to the City’s budget in 2025-26 are now projected to be hundreds of millions of dollars less than previously projected. In addition to these trends, costs will increase because of liability payments, wildfires, personnel and other costs.
Check out the letter:
Dear Mr. Szabo:
Since taking office two-and-a-half years ago, I have confronted some of our city’s toughest challenges by working to change the broken status quo at City Hall.
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We created new initiatives like Inside Safe to reduce homelessness in Los Angeles for the first time in years, including a 10 percent decrease in street homelessness.
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We declared a commitment to public safety, and the latest annual crime data shows reductions in violent crime and property crime, including drops in homicides, shooting victims, and burglaries.
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To retain and attract talented public servants during a time of increased cost of living, we forged new contracts to invest in our city’s workforce.
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We collaborated last year to eliminate thousands of “ghost” positions that were carried on the City’s books year after year, despite the fact that these vacant positions do not deliver any services to Angelenos.
In eliminating vacancies in last years’ budget process, I cited the need to “break away from the budgeting of the past,” and to turn against “flawed budgeting that does not reflect how departments should actually operate to deliver basic services.” I called for a “reset for our budget,” and the need to “take advantage of these tough times to determine how departments can function in a more efficient and effective manner.” We must leave the old way of doing things behind.
The need for structural sweeping reform of the City’s budget and operations has only intensified, and changing the status quo is at the heart of my office’s work as we continue to draft my proposed budget for the 2025-26 fiscal year.
Downward economic trends make it so revenues to the City’s budget in 2025-26 are now projected to be hundreds of millions of dollars less than previously projected. In addition to these trends, costs will increase because of liability payments, wildfires, personnel and other costs:
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The unanticipated tripling in the amount of liability payments further stresses our budget.
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The wildfires in the Palisades have increased costs related to emergency response and recovery, and will decrease revenues from lower property tax assessments on lost homes, lost revenues from closed businesses, and other negative economic impacts.
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Los Angeles’ budget is facing extreme uncertainty in terms of federal funding, and our City is affected by downward national economic trends ranging from unpredictable federal fiscal policy and ever-changing tariff proposals, to volatile stock markets, to continued post-pandemic impacts related to tourism, lower office occupancies and more.
For too long, the City’s budget and operations have simply been based on the way the City operated in the previous year. This year, we must deliver fundamental change in the way the City operates and base our budget on how the City can best serve the people of Los Angeles and to best use their scarce budget dollars.
Therefore, I direct your office to develop a comprehensive proposal to save between $500 million and $900 million in structural budgetary expenses in the 2025-26 Fiscal Year to bring the budget closer into balance in future fiscal years. This should include:
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Proposals that reduce liability costs
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Proposals to change the number, structure, and responsibilities of departments and reassign city services to refocus the city’s work on its most critical services.
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Proposals to reduce departmental contract expenses
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Proposals that realize payroll and benefit savings
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Proposals that preserve our reserve fund
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Proposals that create structural reforms to enable ongoing budget balance in future fiscal years
We must leave no stone unturned. We must consider no program or department too precious to consider for reductions or reorganization. In this time of economic uncertainty, our north star must be whether a City program or department is operating as efficiently and effectively as possible. If they can operate better, or if they should not operate at all, we must make those changes, and make them now.
It is my hope that we deliver a reform budget that creates comprehensive short-term and long-term budgetary relief and stability. Accompanying this budget, my office will present economic strategies to generate tax revenues to improve the city’s fiscal health and ability to deliver services to Angelenos.
Thank you for your partnership and swift response.
Sincerely,
KAREN BASS
Mayor
