Los Angeles faces nearly $1 billion budget shortfall

Los Angeles is facing a massive budget shortfall of nearly $1 billion. The city council met in private to discuss this financial crisis. City budget officer Matt Szabo announced that layoffs in the city workforce are now "nearly inevitable" due to the worsening situation. The city's financial troubles stem from increased legal payouts and weaker-than-expected tax revenues. Tax income is projected to decrease further in the new budget year starting July 1. Pay raises for city employees, which will cost an additional $250 million, are also contributing to the budget gap. Mayor Karen Bass must present a plan to address the shortfall by April 21. She emphasized the need for immediate action. Szabo reported that thousands of layoffs may be required. The council is considering asking public employee unions to defer scheduled raises or agree to other concessions. In 2020, city leaders previously negotiated with unions to delay raises due to the pandemic. The council recently approved raises for various groups, including police and firefighters, but this added financial strain. They had also cut about 1,700 vacant positions to accommodate pay increases. City Council President Marqueece Harris-Dawson and Yaroslavsky outlined priorities for managing the budget, including preserving emergency reserves and seeking state support. They may also consider raising public service fees, such as trash collection rates, to increase revenue. City Controller Kenneth Mejia indicated that the budget issues are due to internal decisions rather than external crises like COVID-19. Factors like federal policies and recent fires may further impact finances, so the council will need to act carefully to address these challenges.