Upzoned Podcast Summary

Episode Title: LA Just Avoided 1600 Layoffs. Is That a Good Thing?
Date: October 1, 2025
Host: Norm (guest hosting for Abby Newsham, Strong Towns)
Guest: Edward Erfurt, Chief Technical Adviser, Strong Towns

Episode Overview

This episode dives deep into Los Angeles' announcement that it had averted 1,600 city staff layoffs amid a looming $1 billion budget shortfall, thanks to labor negotiations and “creative solutions.” Norm and Edward critically analyze whether this headline move is genuinely a sign of financial health or just a temporary fix, using Strong Towns' framework for resilient municipal finance. The conversation explores LA’s fiscal tactics, the underlying flaws in public budgeting, and the broader implications for cities of all sizes.

Key Discussion Points & Insights

1. LA’s Budget Maneuver Explained

• Context: LA faced a projected $1 billion shortfall and originally proposed cutting 1,600 positions. Instead, after negotiations, no layoffs will occur.
• Strategy: Employees are being shifted across departments—such as moving staff from the city’s main budget to entities like the port, airport, and water/power—rather than being dismissed outright.
  • “Departments are shifting employees ... into funded positions in some of the other agencies that are affiliated with the city.” (A | 01:50)
• Surface-Level Victory: The hosts note this is celebrated politically, but question the true resilience and sustainability of the solution.

2. The ‘Growth Ponzi Scheme’ and Fragile City Budgets

• Ed’s Critique: Edward draws parallels to Strong Towns' “growth Ponzi scheme,” explaining that temporary fiscal fixes mask underlying fragility.
  • “All that they have done is address the budget for next year on paper ... They haven’t actually gone and become a more resilient community.” (B | 03:57)
• Short-term Accounting Tactics: Swapping jobs between departments, holding open positions, and symbolic gestures (like small pay cuts by leadership) don’t solve structural problems.
  • “Let’s say the mayor took 100% pay cut ... It’s token. It’s not going to show up anywhere.” (B | 08:47)

3. Structural Revenue and Spending Problems

• Persistent Deficit: Even 1,600 jobs saved (approx. 2.5% of workforce) only accounts for a fraction of LA's outlays, with revenue still lagging and cost pressures rising.
  • “That’s only 160 million. That still leaves a hole of 840 million ...” (A | 27:10)
• Revenue Limitations: Property tax constraints (e.g., Prop 13 in California) and over-reliance on volatile sales tax hamper fiscal stability.
• False Equivalence to Private Sector Cuts: Contrasts how businesses cut non-essentials first, but cities often do the reverse—retaining positions while slashing services.
  • “Cities are so quick to cut service ... but retain all the positions ... completely at odds with what it takes to build lasting value.” (A | 10:16)

4. Impact of Unions and Political Pressures

• Union Dynamics: Anecdotes illustrate how union protection can lead to retention of problematic employees and a maximalist, “save every job” approach.
  • “Her promise was ... we will help you stay in. It appalled me ... but it’s part of a bigger ethos ...” (A | 11:37)

5. Why Most Cities Fly Blind: Opaque Budgeting

• Cash-Accounting and Projections: Municipal budgets often rely on optimistic projections and short-term cash movements, not on long-term sustainability.
  • “Cash accounting based off of a projection that we hope we achieve ...” (B | 17:50)
• Rainy Day Fund “Tricks”: Increasing reserves for flexibility can mask imbalances, and departments rush to spend end-of-year funds to avoid budget reductions.

6. Long-Term Financial Health: The Need for Better Tools

• The Finance Decoder: Strong Towns’ “Finance Decoder” is highlighted as a tool to analyze trends in audited city accounts and uncover structural decline.
  • “Through this finance decoder ... 16 line items ... the sustainability indicators ... flexibility ... vulnerability ...” (B | 20:52)
• Real-World Examples: Cities like San Antonio and Chicago discussed as case studies for underlying fiscal vulnerability despite ‘balanced’ annual budgets.

7. Practical Steps for Cities

• Maximize Existing Resources: Focus on intensifying “productive” land uses (e.g., facilitating accessory dwelling units and infill development) to generate more tax revenue with less added liability.
  • “Each parcel is a tool for building prosperity ... let’s figure out the little stuff.” (A | 25:06)
• Stop Digging the Hole Deeper: Prioritize core maintenance over new capital projects, resist the urge to shuffle money for short-term optics.
  • “I would tell every city to stop digging. ... Cancel all your capital projects that involve anything other than basic maintenance.” (B | 35:33)

8. Reframing Public Communication

• Call for Transparency: Advocating for honest public messaging about difficult fiscal realities, rather than just feel-good press releases.
  • “Isn’t this awesome? But actually, ... here’s the situation we find ourselves in ... Tough talk with Tom ...” (A | 38:15)

Notable Quotes & Memorable Moments

• On the Illusion of Fiscal Health:

  • “All that they have done is address the budget for next year on paper ... They haven’t actually gone and become a more resilient community.”
    — Edward (B | 03:57)

• On Token Cuts:

  • “Let’s say the mayor took 100% pay cut ... It’s token. It’s not going to show up anywhere.”
    — Edward (B | 08:47)

• On Staff Transfers as Solution:

  • “We’re not going to do layoffs, but that job you had in the public works department, we’re now going to have you report over to the port ...”
    — Edward (B | 07:14)

• On the City’s Net Financial Decline:

  • “San Antonio ... in 2009 was 1 billion. ... Today their net financial position is negative 4 billion.”
    — Norm (A | 28:08)

• On Press Releases vs. Reality:

  • “This reads like a press release ... wow, problem has gone away ... But as we dig a little deeper, we say, no, you’re far from fine, you’re going to really struggle.”
    — Norm (A | 27:58)

• On the Value of the Finance Decoder:

  • “It is going to show you, it’s going to decode everything in your financial documents that you can’t see today.”
    — Edward (B | 33:23)

• On Productive Land Use:

  • “Each parcel is a tool for building prosperity as well as happiness and human ... flourishing.”
    — Norm (A | 25:45)

• On Budget Best Practices:

  • “I would do addition by subtraction in every project. I want us to figure out: What are the things we can do ... to make a road safer and ... save us money on that project?”
    — Edward (B | 36:09)

Important Timestamps for Key Segments

• [01:18] – Episode topic introduction and LA budget context
• [03:00] – Edward outlines common city budget challenges and “growth Ponzi scheme”
• [09:04] – Discussion of scale and impact of job-saving measures
• [14:24] – Municipal budget practices and shortcomings explained
• [20:52] – Strong Towns Finance Decoder: introduction and usefulness
• [24:11] – Revenue productivity from neighborhoods and accessory dwelling units
• [27:10] – Real math: why job cuts don’t solve the whole problem
• [29:48] – Short-termism in capital project prioritization and optics
• [33:04] – Concrete advice: do the math, stop speculative projects, enhance productivity
• [38:04] – The need for frank public conversation and transparency
• [40:14] – Promotion of Strong Towns’ tools, community, and learning opportunities

Resources & Recommendations (from the Downzone segment)

• Book: Key to the City: How Zoning Shapes Our World by Sarah Bronin (Edward’s critical perspective—challenges zoning as the answer) [42:43]
• Book: Shade by Sam Bloch—A look at sunlight, shade, and urban design [44:24]
• Follow: Eric Kronberg on LinkedIn for urban infill graphics [44:02]
• Strong Towns Tools:
  • Finance Decoder – Free tool for evaluating your city’s financial health
  • Ask Strong Towns Anything – Weekly interactive Q&A with members

Episode Tone & Conclusion

Norm and Edward’s tone is candid, analytical, occasionally wry (“Hogwarts School of the Dark Arts of Strong Towns”), and deeply committed to transparency and financial resilience over political spin or short-term optics. The conversation underscores that headline solutions—like LA’s averted layoffs—don’t necessarily indicate fiscal health. Instead, listeners are urged to look beyond surface-level fixes and demand honest, data-driven approaches to city finance, starting with their own communities.

For more:

• Try the Finance Decoder
• Join Strong Towns and attend "Ask Strong Towns Anything"
• Rethink what it means for your city to “balance the budget”—and start asking new, better questions.