LA's $1B deficit closed, Mayor Bass signs agreement protecting city workers from layoffs

LA City avoids laying off 1,600 workers

Los Angeles City announced it will not be laying off 1,600 workers.

LOS ANGELES - Mayor Karen Bass signed an agreement Tuesday to avert the planned furlough of municipal employees and all remaining civil service layoffs for fiscal year 2025-26, an outcome resulting from months of negotiations with labor unions.

Layoffs adverted 

What we know:

In April, Bass had proposed more than 1,600 layoffs as part of an effort to eliminate a nearly $1 billion budget deficit caused by overspending, skyrocketing liability payouts, lower-than-expected tax revenues, and a weakening economy.

The number of layoffs was then later reduced to 600 after budget maneuvering by the City Council.

Of the 600 layoffs, about 250 Los Angeles Police Department civilian positions were proposed for elimination, however, an agreement with the Los Angeles Police Protective League (LAAPL), which represents officers, saved those jobs. LAAPL agreed to have its members voluntarily take overtime as paid time off in order to reduce LAPD's overtime expenses and eliminate civilian layoffs.

Meanwhile, the LA City Coalition of Unions and Engineers and Architects Association agreed to take up to five unpaid holidays in 2026 to avoid another 300 civilian layoffs.

Bass said additional layoffs were averted by transferring some employees to the city's proprietary departments such as the Port of Los Angeles, Department of Water and Power, and Los Angeles World Airports. Those three entities have separate budgets that are not impacted by the city's General Fund.

What they're saying:

During a news conference at City Hall Tuesday, Bass said negotiations with labor unions protected the workforce and preserved city services.

"We embrace creative solutions and work aggressively toward our shared goal because that is our mission; that is our charge, to refuse to allow challenges to slow us down, and we will move every ounce of urgency we possess to continue moving Los Angeles forward in a new direction away from the old failed ways of doing business," Bass said.

David Green, president and executive director of Service Employees International Union, which represents approximately 11,000 city employees, described the agreement as "historic," and one that ensures workers will keep their jobs while helping the city to increase revenues.

$1 billion deficit now closed

Dig deeper:

City Administrative Officer Matt Szabo reiterated that there is no longer a $1 billion deficit. He said the gap was closed when the mayor and City Council approved the 2025-26 budget.

"The challenge that we had up to today was how do we implement the budget, and implement the reductions without triggering the layoffs and the service reductions that those layoffs would cost as it relates to this current fiscal year," Szabo said.

Szabo said his office and other teams are monitoring revenues, expenditures, and liabilities. He is expected to provide a report on the condition of the current year's budget in October.

"But as of now, the billion-dollar deficit was closed, and as this budget is implemented, we are projecting structural balance in the following fiscal year, along with surpluses in years three and four," he added.