Economic slowdown could hit L.A.'s budget hard next year, city controller says

Los Angeles Controller Ron Galperin, shown with other city officials in 2015, warned Wednesday that revenue for the L.A. city budget next fiscal year could come in far lower than previously projected, due in large part to the crisis spurred by the coronavirus pandemic.
(Los Angeles Times)

Los Angeles could experience a significant drop in revenue in the upcoming budget year, fueled in large part by the financial downturn triggered by the coronavirus pandemic, City Controller Ron Galperin said Wednesday.

The city’s general fund — which pays for police officers, firefighters and other basic services — could see its tax revenues come in as much as $598 million below projections from earlier this year, depending on how long the crisis lasts, Galperin said in a memo updating city leaders on his financial projections.

Here’s an inside look with doctors and nurses on the frontlines of the COVID-19 battle.

Under that scenario, the city would experience a year-to-year decrease in revenue of $160 million, an amount that would be “very significant,” Galperin said in an interview.

Under a more favorable economic outlook, one that has the shutdowns ending earlier, revenues could come in $194 million below previous projections, leaving the city with a modest increase in overall revenue.


“We are using ranges because the economic situation is uncertain and could remain so for months,” Galperin said in his memo. “It is unclear exactly when and how our economy will rebound.”

Mayor Eric Garcetti has told top city staffers that Los Angeles might prohibit big gatherings until 2021 because of the coronavirus threat.

Garcetti is scheduled to release his budget on Monday for the fiscal year that starts July 1. On Monday, the mayor said there was “no question” that next year’s budget would include cuts.

A big chunk of the city’s developing budget woes are due to a more than 70% drop in tourism activity, Galperin said in his memo.

For example, tax revenue from hotel beds and home sharing is currently 30% below the projections offered a month ago, he said.