Mayor Bass Proposes Major Cuts to Close Budget Gap—CRE Industry Could Feel the Effects
Los Angeles is facing a nearly $1 billion budget deficit for the upcoming fiscal year, and Mayor Karen Bass is proposing 1,647 layoffs along with several department consolidations to close the gap.
Rising costs and lower revenues could lead to city service cuts that may delay or disrupt the CRE industry.
What You Need to Know
Mayor Bass’ proposed budget includes:
1,647 layoffs across city departments, including frontline service roles.
Several departments, including Aging and Workforce Development, will merge into a new Community and Family Investment Department.
Some commissions, like the Health and Climate Emergency Commissions, will be eliminated.
Some city projects are being delayed to prevent more layoffs.
The city will keep a 6% emergency fund, above the required 5%.
Key Financial Challenges:
- $315 million revenue gap
- $275 million needed to restore reserves
- $100 million increase in liability claims
- $100 million increase in pension costs
- $80 million increase in solid waste fee subsidies
Emergency costs, like legal fees and the Palisades Fire, really impacted the deficit.
The City Council still needs to approve the budget. Labor groups are pushing back, saying cuts to key workers like sanitation crews could hurt the whole city.
How It Impacts You
For the commercial real estate industry, these cuts could mean:
Delays in permits, inspections, and project approvals, especially as staffing reductions slow department operations.
Postponed infrastructure projects, impacting utilities, streetscape improvements, and area accessibility.
Potential reductions in LAPD staffing, which may affect response times and security in business districts.
Increased financial pressure on the City may lead to consideration of raising fees or implementing new costs to help close the budget gap.
Additionally, department consolidations and commission eliminations could lead to less transparency, fewer policy forums, and a slower response to industry needs.
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Stay connected with us on BOMA on the Frontline as we follow the city's budget and its impact on our members.
