LOS ANGELES (CNS) – Los Angeles Controller Ron Galperin released the city’s annual revenue forecast today in which he highlighted projected revenue growth but also said government spending is increasing and “economic uncertainty” could affect the city’s financial picture.
The annual Revenue Forecast Report provides updated estimates of the current year’s general fund and special fund revenues and estimates how much money the city will bring in over the next fiscal year.
The forecast is intended to help inform the mayor and City Council as they discuss the city’s fiscal year 2021 budget this spring, Galperin said.
The controller provided a set of good and not-so-good highlights from the forecast.
— General fund revenue is up 6% to $6.61 billion for fiscal year 2020, 0.7% higher than the amount budgeted. Next year, the general fund is set to increase another 3.2%.
— Cannabis-related taxes will generate $128 million for the city this year — $84 million in business taxes, $30 million in sales tax and $14 million in permit fees. The overall number will grow if the city intensifies its efforts to permit new cannabis businesses and enforce against illegal ones.
— The Street Damage Restoration Fee will receive bring in $54 million this year, up from less than $10 million per year historically.
— Expenses will eclipse revenue growth this year due to the increased cost of employee salaries and benefits. Galperin said short-term fixes can help the city’s bottom line now, but any unanticipated economic stress could put Los Angeles in a “far more precarious” financial situation.
— The Port of L.A. is projecting a 25% drop in cargo volume in March and 12% to 15% over the first quarter of the year due to the concerns about the global coronavirus outbreak. The stock market just had its worst week since the 2008 financial crisis and air travel to the United States could also be reduced, affecting the city’s collection of sales tax, hotel tax and the local
economy as a whole.
— Changing consumer habits are causing some revenue sources to drop significantly, including the telephone users tax, which will continue its downward slide from $267 million in 2010 to $132.7 million this year, a 50% drop over 10 years.
— Enforcement of the city’s home-sharing ordinance has resulted in a 49% decrease in listings across all hosting platforms, making it necessary for the city to closely monitor transient occupancy tax receipts for any future negative impacts.
The full report can be found at lacontroller.org/revenueforecast2021.