Faced with seemingly no other options, Los Angeles leaders may lay off thousands of city employees during the upcoming fiscal year to remedy its $1 billion shortfall. 

“The severity of the revenue decline, paired with rising costs, has created a budget gap that makes layoffs nearly inevitable,” City Administrative Officer Matt Szabo said during the council meeting Wednesday. “We are not looking at dozens or even hundreds of layoffs, but thousands.”

However, thousands of layoffs “cannot and will not be the only solution” to the city’s dire situation, according to Szabo. The City Council must consider service cuts to balance its budget. In closed session, city leaders also mulled over the possibility of deferring union-negotiated raises to police officers, firefighters, trash truck drivers and librarians. 

“The closest this would compare to would be, I believe, it was the ’09,’10 budget, which was the first year that the city felt the full impact of the crash in 2008 and the subsequent recession,” Szabo said.

Szabo attributed the fiscal crisis to the tax revenue missing its projections by $315 million, firefighter and police pension payments increasing to $100 million, $80 million in solid waste fees, more than $100 million in legal payouts and the $275 million needed to replenish the city’s reserve fund. Despite the economic constraints, Szabo said the Mayor’s Office is “absolutely committed to preserving as many jobs and city services as possible.”

In a statement, Mayor Karen Bass, whose budget will be presented next month, said the city must implement “fundamental change” to its operations.

“This year, we must deliver fundamental change in the way the city operates and base our budget on how the city can best serve the people of Los Angeles and to best use their scarce budget dollars,” she said in a statement.

Bass also attributed the city’s financial turmoil to the destructive Palisades Fire.