Los Angeles predicts $1 billion budget deficit upcoming year

Los Angeles is facing a budget shortfall of nearly $1 billion for the next fiscal year. City officials say this is mainly due to the costs from January's wildfires and changes in federal policies. Matthew W. Szabo, the city's top budget official, warned the City Council that significant cuts and layoffs are likely. He described the situation as "extraordinary," comparing it to the financial crisis of 2008. The budget gap represents one-eighth of the city’s $8 billion general fund. The city has already incurred over $282 million in costs from the wildfires. These expenses include overtime pay for firefighters and police officers, as well as infrastructure repairs. This unexpected financial burden has further complicated the city’s budget. Federal policy changes are also impacting Los Angeles. City controller Kenneth Mejia indicated that revenues could remain flat or decrease next year due to the wildfires and rising disaster insurance costs. He highlighted that new policies from the federal government could hurt tourism and local businesses. Additionally, the city had already been under financial strain before the wildfires. It struggled to fund new contracts for public safety and civilian employees, leading to the elimination of around 1,700 vacant positions last year. The city must now prepare for potential further reductions.