Courtesy photo
By Earl Ofari Hutchinson
Contributing Columnist
The warning signs were there for months — maybe even years. Sooner or later, but likely sooner, Los Angeles would run out of money to pay its bills.
The warnings became a painful reality when Mayor Karen Bass made it official. L.A. is in big fiscal trouble. It’s in the deficit hole to the tune of nearly $1 billion. That means only one thing: cuts, cuts and maybe more cuts.
As always in budget crunch situations, the first to go are employees. The preferred method of making labor slashes is a hiring freeze and then the inevitable layoffs. Both are on the table for L.A. to close the deficit gap.
The other deficit reduction measure is either shutting down or whittling down city departments. All of these bring howls of protest from unions and department heads. That’s exactly what happened when Bass announced the harsh fiscal gap-closing measures.
The big question mark as always when cities are forced to make painful budget slashes is who will get hurt the most by them. In L.A., there’s little guesswork about that. South L.A., East L.A., big swatches of the San Fernando Valley. These are the most underserved, needy residents, and are the most reliant on fully functioning city services.
The overwhelming majority of the residents are lower income, Hispanics and Blacks. In addition, many of the residents are employed in one capacity or another in city public employment jobs. Those jobs could be on the chopping block depending on how deep the job slashes are.
One other area that has lots of residents worried is what will deep cuts mean in the fight against L.A.’s perennial homelessness catastrophe. There has been a lot of finger pointing from many quarters in recent months about how L.A. is spending the tens of millions that have poured into the city’s purse to battle homelessness.
The charge of sloppy record keeping, mismanagement and outright misappropriation of funds have flown hot and heavy. The demand for audits, strict reporting and transparency have grown louder. Cuts in services will have an obvious adverse impact on combating homelessness.
How did all this happen? There’s no one simple answer. The checklist of immediate answers is surging liability payouts, the costs of combating the wildfires, declining tax revenues, city labor union employee mandated and negotiated pay hikes, and the shrinking state revenue support dollars. All are factors in L.A.’s cash shortfall. But they don’t totally explain why L.A. faces its most severe budget crisis in years.
The blunt fact is that L.A.’s cash shortage woe is hardly unique. Most of the nation’s big cities are facing cash crunches. The steadily surging costs of nearly all goods and services in the past two years have put a crimp in retail and commercial building, rentals and maintenance. This sharply reduced the tax revenues for city coffers.
Cities no longer can rely on the tens of billions in federal bailout dollars that they got during the pandemic from 2020 to 2024.That emergency aid filled a lot of the financial holes that had begun to deepen in city budgets because of shrinking tax revenues, higher labor costs, and plunging commercial development tax revenues.
Even if the big cities, L.A. being near the top of that list, could have weathered these ill blown financial winds, it would still face potential budgetary crisis. That crisis would be made in Washington, D.C. Or to be even more specific, made courtesy of the Trump administration.
President Donald Trump has made clear that there will be cuts, lots of them, in just about every area of government funding. His budget slashing pal Elon Musk has already whacked away at nearly every government agency’s personnel and funding. This has had more than a ripple effect on state and municipal budgets.
They rely heavily on funding and service support from the federal government. Trump has gone one better than just hacking away at the federal dollar flow. He’s also brought a mean-spirited, hard-edged ideological vendetta to the dollar flow from Washington.
He’s made clear that he has no particular fondness for bailing out Democratic-controlled, liberal to moderate, cities such as Detroit, Philadelphia, San Francisco, and of course L.A. He plainly sees them as the political enemy. Unfortunately, he’s in the top spot and can pull the funding strings pretty much any way he chooses. You can bet he will.
So, Bass and city budget officials will be forced to do a lot of juggling, scrambling, and head scratching to figure out how deep to cut, where to cut and who to cut. They will have to be prepared when they make those painful decisions to get lots of blowback and screams of protests from the unions, some elected officials, and constituent advocacy groups.
The worst part of all is that it’s a mess that’s not likely to end as a one and done action. With Trump in the saddle, economic uncertainty and chaos and fiscal reckonings in states and cities, as the movie line goes, “it’s only the beginning.”
Earl Ofari Hutchinson is an author and political analyst. His latest book is “A Tale of Two Los Angeles Wildfires — Separate and Unequal” (Middle Passage Press). He also is the host of the weekly The Hutchinson Report Facebook Livestreamed.
