Politics & Government
Coronavirus Costs Los Angeles $231 Million, Officials Say
The coronavirus crisis will cause a $231 million revenue decline for the city of L.A. this year, and as much as $598 million next year.
LOS ANGELES, CA — Los Angeles Controller Ron Galperin said Wednesday that his office estimates the city will fall about $231 million short in projected revenue this year and as much as $598 million next fiscal year due to the effects of the coronavirus pandemic.
"The city is facing an unprecedented crisis due to the coronavirus pandemic, and our revenue outlook is much darker than it was even a month ago," Galperin said. "While these struggles are not unique to Los Angeles, our city is in a better position than most municipalities because of the diversity of our revenue streams and healthy reserve fund balance."
Galperin said the reductions will strain the city's ability to provide services and will require "some very difficult budgeting decisions" this year and in the future.
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Deliberations will begin after Mayor Eric Garcetti releases his 2021 budget proposal on Monday, the controller said.
The city is now estimated to receive $6.38 billion in revenue this year, a $231 million decrease from the previous March 1 estimate of $6.61 billion.
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Galperin said even with this revision, Los Angeles is not facing a cash-flow crisis and is still projected to see 2.3% growth over last year.
The controller also said Los Angeles will likely receive state and federal funds due to the coronavirus pandemic.
As for the next fiscal year, the revenue decline is estimated by the controller's office to be between $194 million and $598 million, depending on the length of the current stay-at-home orders and how long it takes for the economy to recover from the crisis.
Travel and tourism revenue is expected to fall by 70% in the final quarter of this fiscal year, and taxes from hotels and home-sharing could drop by $61 million this year and up to $80 million in 2021.
Galperin said the forecasts are still behind as tax revenue is collected for April, and businesses both large and small have since closed their doors in an attempt to slow the spread of COVID-19.
For the next fiscal year, business tax revenue could drop by as much as $85 million next year and sales tax could take a $67 million hit.
Expenses will eclipse revenue growth this year due to the increased cost of employee salaries and benefits, with additional short-term expenses for the city's response to COVID-19, according to Galperin.
The fiscal year runs from July 1-June 30.
—City News Service
