LA Controller reports $550M revenue shortfall by end of fiscal year
LOS ANGELES - Los Angeles Controller Ron Galperin announced Monday the city is expected to have a $550 million revenue shortfall by the end of the fiscal year, but revenues may begin improving during the next fiscal year.
"With a $550 million revenue shortfall, the end of this fiscal year is going to be a tough one," Galperin said. "Our ability to continue delivering the same level of services to Angelenos is imperiled by our financial situation. But because COVID-19 vaccines are becoming more available, it is quite possible that the economy could begin to turn the corner sometime this summer, resulting in an uptick in city revenues during the next fiscal year. There is reason to be cautiously optimistic, but it will be a long road to full recovery."
The current fiscal year runs through June 30, and General Fund revenues during this period are projected to be 8.3% lower than the $6.14 billion that was budgeted.
According to Galperin, during the 2021 fiscal year, property tax revenues increased 6.1% and cannabis business taxes increased 79%, but these increases were offset by:
• a 66% decrease in the transient occupancy tax on hotels and motels;
• a 44% decrease in the parking occupancy tax; and
• a 15% decrease in the telephone users tax.
During the next fiscal year, which begins on July 1, Galperin said the economy may stabilize and lead to steady growth over the course of the year. The General Fund is expected to increase 4.4% to $6.4 billion, and revenues from property tax, sales tax and the cannabis business tax are expected to increase. Transient occupancy tax revenue, which fell 75% from its peak the previous fiscal year, is expected to increase during the second half of the 2022 fiscal year, but it likely won't return to pre-COVID levels, Galperin said.
The city's revenue projections would improve with help from federal and state relief funds, according to Galperin.
Los Angeles is set to receive more than $1.2 billion from the COVID-19 bill before the U.S. Congress, but those funds are not included in Galperin's revenue forecast. If approved, the funds would help the city replace lost revenue, pay for community services and assist with pandemic response efforts.
More information about the revenue forecast is available online.
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