CBS Los Angeles

LA County Revenue Expected To Plummet $7B Due To Coronavirus Shutdown

For the city of L.A., travel and tourism revenue is expected to fall by 70 percent in the final quarter of the 2020 fiscal year.

LOS ANGELES (CBSLA) – The city and county of Los Angeles are facing revenue declines in the billions due to the coronavirus pandemic, it was revealed Wednesday.

A person wearing a mask walks past the TCL Chinese Theater on April 15, 2020, in Hollywood. (Getty Images)

L.A. County Supervisor Kathryn Barger announced that the county is facing a decline of about $7 billion in overall revenue.

County CEO Sachi Hamai said sales tax revenue alone was $5.9 billion last year, but she said the county is expecting that to decline by more than $2 billion by the end of the fiscal year, which runs from July 1 to June 30.

“For the county, there’s potentially a loss in billions of dollars in sales tax revenue to fund vital public services,” Hamai said

The county implemented a hiring freeze once the pandemic orders were put in place in early March, and Barger said supervisors are asking departments to present budget plans with 10 percent, 15 percent or 20 percent cuts.

Meanwhile, city of L.A. Controller Ron Galperin said Wednesday his office estimates the city will fall about $231 million short in projected revenue in the 2020 fiscal year and as much as $598 million in the 2021 fiscal year.

“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.

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.

Travel and tourism revenue is expected to fall by 70 percent 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 even with this revision, L.A. is not facing a cash-flow crisis and is still projected to see 2.3 percent growth over last year.

The controller also said L.A. will likely receive state and federal funds due to the coronavirus pandemic.

(© Copyright 2020 CBS Broadcasting Inc. All Rights Reserved. City News Service contributed to this report.)