L.A. mayor's budget turns 180 degrees from last year

Mayor's office

Los Angeles Mayor Karen Bass released a $14.6 billion spending plan Monday that funds hiring 510 police officers to cover retirements, plus street and lighting repairs to freshen the city ahead of the 2028 Olympics.

This year's budget proposal is a 180 degree turn from last year's when she warned 1,650 layoffs were needed to close a $1 billion budget gap. It's also a far cry from earlier in the year when expectations were another year of cuts could be on the horizon.

It's an election year for Bass, who highlighted successes in a State of the City video released after the budget briefing.

"For too long, City Hall watched as more Angelenos fell into homelessness, L.A. underbuilt housing, our police department shrank and our infrastructure crumbled," Bass said.

"This budget is continuing to move L.A. forward," she added. "I will absolutely not go back to the broken systems of the past."

Her budget team said during a press briefing that revenues came in better than expected in February when Chief Administrative Officer Matt Szabo was asking department heads to look for places to cut in his quarterly fiscal report.

Szabo said during Monday's press conference the outlook is brighter because revenues have stabilized.

"We are not yet in a place where we can restore wholesale the services we have reduced, but we have stabilized," Szabo said.

Last year's layoffs didn't materialize, Bass said, because she and the City Council were able to secure agreements with city unions to avert them. Following intense labor negotiations, the final plan saved over 1,000 positions that were initially at risk, utilizing department transfers and budget adjustments, she said.

While layoffs were averted, the budget involved hiring slowdowns and restructuring, particularly affecting civilian staff at the Los Angeles Police Department. To avoid layoffs, the city implemented voluntary unpaid days and transferred positions to other departments, such as the Port of Los Angeles.

The proposed 2026-27 budget reflects a more stable financial position with no layoffs — and actually proposes police and street service position hiring, Bass' finance team said.

"Today, as you know, street homelessness is down by 18%, while it increased 18% across the nation," Bass said, alluding to the results of the annual count announced in March.

The budget decreases spending on homelessness by $165 million to $788 million. The decrease comes as the city spends the last of its Proposition HHH bond money.

Bass, who has faced criticism for how she handled the Palisades wildfire and transparency on the after-action reports, is up for re-election in June.

She emphasized her 12 years as a congresswoman in saying that experience has helped her secure funding. The city, she said, has to work with both the federal government and the state to support efforts to tackle the housing crisis and to make sure the city receives reimbursements from the Federal Emergency Management Agency for costs associated with the Palisades wildfire.

No plans have been announced to issue judgment obligation bonds related to the city's liabilities. That has been a resource tapped by the city in the past.

The budget included a $23 million increase in liability expenses to $210 million. The majority of the city's claims arise from the police department, which Bass said is working to increase training to avoid use of force claims.

The rating agencies are more concerned about the potential liabilities related to the Palisades fire.

Moody's Ratings downgraded 13 Los Angeles-related credits in March, including the city and its Department of Water and Power, citing the risk from lawsuits related to the fire. The outlooks on all credits were also revised to negative from stable.

Moody's cut the city's issuer rating, general obligation bonds, senior wastewater revenue bonds and solid waste resource bonds to Aa3 from Aa2 and lease obligation bonds to A1 from Aa3 and to A2 from A1 depending on asset essentiality.  

The downgrades follow a Feb. 19 ruling by Los Angeles Superior Court Judge Samantha Jessner that said California law allows property and business owners to pursue claims that the Los Angeles Department of Water and Power failed to supply enough water to fight the January 2025 wildfire that consumed the Palisades area, destroying more than 6,800 structures and killing 12 people. 

Los Angeles Controller Kenneth Meija supported inclusion of the liability costs in the budget, which he said in an Instagram post, have not been included historically. Meija created a dashboard to track those costs that is on his website.

The budget increases spending for the police department by $233 million to $3.6 billion hiring 510 police officers will maintain a force of 8,555. 

The mayor said the city's police force is small for one of the nation's largest cities. When questioned by reporters about potential pushback from some members of the City Council on police hiring, she responded: "I don't think they want us to have a reduced police force as we prepare for The Olympics."

The budget also increases funding for street services by $55 million to $478 million. The recently launched streetlights initiative will repair and replace up to 60,000 street lights citywide over the next two years with no impact to the city's general fund, Bass said.

The budget will now go to the City Council's finance committee for several weeks of deliberation.