Los Angeles Faces a Staggering $1B Deficit

In January this year, a series of wildfires swept through the Los Angeles region, severely impacting the city of Los Angeles, particularly the working-class communities of the city. The damages, along with other factors, caused federal policy changes and a projected fall of $1 billion from its budget, adding to the city’s debt over the past few months.

For these economic challenges, the City Council and Bass passed a $14 billion budget for the upcoming fiscal year, beginning July 1st. This spending plan plans to address the billion-dollar deficit by reducing expenditures in some areas and adjusting the number of positions in each department of the city. This budget, however, is still larger than the $12.9 billion budget for the 2024-25 fiscal year.

However, this budget calls for more than 600 layoffs in the city’s first-responder departments as well as other departments.. Elected officials have discussed proposals to reduce layoffs by perhaps transferring those endangered from being laid off to other departments of the city. These include the Port of Los Angeles, Los Angeles World Airports, and the Department of Water and Power. All three of these departments will not be impacted by the changes in the General Fund because they operate on their revenue from their respective services.

This deficit of $1B was caused mainly by the January wildfires, which accounted for about $202 million just for firefighter and police overtime and infrastructure replacement.

Along with the loss from the wildfires, federal policies such as tariffs, ICE, and reductions in areas of spending worsened the economy of Southern California, and the tourism, businesses, and property taxes in the area were all affected. Tourism decreased, causing businesses to lose profit and more money going into property taxes than into their pockets.

Just to add on to the series of events, President Trump also dropped the federal grants from Biden given to the Los Angeles area.

Before the wildfires, the city had contracts with unions in the area, but in order to cover the cost of employee raises, the city had to eliminate 1,700 positions in the city’s police and first responder departments.

This series of events severely impacted the citizens of Los Angeles and the working class. Many citizens were forced to move out of areas due to the fires in LA, the two most significant being the Palisades Fire and the Eaton Fire. In total, over 40,500 acres of Los Angeles were affected during the wildfires. Approximately 180,000 people were forced to evacuate and relocate as well.

“Of that figure, about 248 LAPD civilian employees are expected to lose their jobs, as well as 57 workers from the Personnel Department, 44 sanitation workers, 41 Fire Department workers, 34 workers from information technology, 33 general services workers, 29 transportation employees, among others.” (NBC LA City News Service)

“It just feels like there’s so many issues that they’re getting lost in the whole, huge mess of issues that they say they can’t pay for,” 23-year-old Perkins said of city leaders.