Los Angeles Mayor Karen Bass released a $13.95 billion 2025-26
The city will issue on Thursday roughly $800 million in subordinate revenue bonds for its wastewater system, split between tax-exempt, taxable and refunding series. The week of May 19, it plans to refund $469.5 million in senior lien revenue refunding bonds.
The Los Angeles Department of Water and Power has a retail order period planned for April 30, and pricing on May 1 for $993 million power system revenue bonds.
As an enterprise fund, the city's wastewater system is supported by its own revenues and doesn't rely on the city's general fund, said Ha To, the city's debt manager.
The mayor's proposed budget has no material negative impact on the wastewater system, To said, adding, the positions fully funded by sewer revenues were not eliminated for budget balancing purposes, but rather dozens of positions backed by the sewer fund were added in the proposed budget to support system maintenance and resiliency efforts.
Bass started her state of the city speech, delivered in conjunction with the budget release, by saying she wasn't "here to gloss over difficulties, but to meet them head-on and to make real change."
"The state of our city is this — homelessness is down, crime is down. These are tough, tough challenges, and they show that we can do so much more," Bass said.
Unsheltered homelessness declined by 10.4% to 29,275 last year, according to the Los Angeles Homeless Services Authority. Homicides in the city are down by 14%, Bass said.
Despite those wins, she conceded the city has a long way to go, and it
"We need a fundamental overhaul of city government to deliver the clean, safe, healthy and orderly neighborhoods that Angelenos deserve in the place they call home — and to reverse decades of failure on homelessness," Bass said. "My pledge is to continue making changes — and I ask the City Council and every Angeleno to join in turning our city around."
The budget hole came as a result of a drop in projected revenues to $8.061 billion, down 1% from projections set when last year's budget was approved, a jump in lawsuit liabilities and personnel costs exceeding the budget, according to budget officials.
Liability payouts, which have averaged about $100 million annually over the past 10 years, are estimated to be $300 million in fiscal 2025-26 and personnel costs are $250 million over budget, according to budget officials.
The mayor's proposal involves laying off 1,647 people and cutting 1,074 unfilled positions, but the cuts aren't expected to affect the city's police or fire departments. The mayor will also preserve funding for her signature Inside Safe program, which has created temporary housing for homeless people in motel rooms.
The Los Angeles Fire Department budget would add 277 positions and receive funding for more paramedics and additional fast-response vehicles, Bass said.
Her proposal consolidates four city departments. The departments of Aging, Economic and Workforce Development, and Youth Development will be consolidated under the Community Investment for Families Department.
Her plan also eliminates the Health Commission which, she said, is an advisory body, whose purview is more closely aligned with county services; the Innovation & Performance Commission; and the Climate Emergency Mobilization Commission.
The Commission for Community and Family Services would be consolidated under the Community Action Agency — Community Action Board, and the Affordable Housing Commission would be consolidated under the Rent Adjustment Commission.
In her speech, she thanked city workers for their dedication and called them the city's greatest asset.
"But I want to be straight with you — my proposed budget unfortunately includes layoffs, which is a decision of absolute last resort," Bass said. "The city attorney and I will be in Sacramento this week to meet with legislative leaders and advocate for resources."
Lawmakers included funding in a
The budget now heads to the City Council for deliberations. The council has until June 1 to approve it.
