Citing an “unprecedented” financial situation in Los Angeles due to the COVID-19 pandemic, Councilman Paul Krekorian said Monday that the Budget and Finance Committee will meet May 11.
Krekorian, who chairs the council committee, said the meeting will consist of an analysis of the city’s anticipated expenses and to address emergency needs through the remainder of the 2019-2020 fiscal year and the next fiscal year beginning July 1. By state statute, the city’s budget must be approved by June 30.
“Massive unemployment and the closing of thousands of small businesses offer vivid evidence of the daunting challenges that face the second-largest city in the nation,” Krekorian said.
The committee will also discuss the budget analysis on projected city revenues and what it will mean for the priorities Mayor Eric Garcetti set forth in his $10.5 billion proposed budget.
Krekorian said the committee will not conduct its traditional department-by-department budget hearings until after the May 11 meeting, which was authorized by Council President Nury Martinez.
Last year, Los Angeles passed a $10.6 billion overall spending plan, the largest in its history, and this year the mayor’s proposal is slightly less than that. City officials noted the budget will continue to be revised throughout the next fiscal year to address areas affected by the pandemic.
“That dramatic decline in economic activity has caused a huge reduction in many of the revenue streams that are the foundation of the city’s budget, including sales tax, business gross receipts tax and temporary occupancy (hotel) tax, among other things,” Krekorian said.
According to Garcetti’s budget proposal, overall revenue from this fiscal year is still expected to come in 1.97% higher than last year, but the amount the city is expected to receive is about $231 million less than anticipated.
Pre-pandemic, city staff had anticipated the city’s revenues next year at $6.92 billion, but the estimate is now about $6.68 billion.
The budget proposal anticipates sales taxes of about $557 million next year, down from the $635 million projection for this year.
The city had built up a reserve fund of about 8.5% of its overall budget, but it expected to use more than half of it to cover costs through the pandemic. The city is expected to have about 3.4% left in its reserves going into the 2020-2021 fiscal year.