Coronavirus Isn't The Only Problem For Los Angeles' New Budget

Mayor Yoga Pants is getting ready to release his 2020-21 budget next week. Just be prepared to see a ton of pay cuts and furloughs for hundreds of city workers outside of police and fire departments.

This isn't just because of coronavirus. Before the outbreak, the city of Los Angeles was already dealing with budget problem and a potential budget shortfall of more than $200 million because of several factors, including: recent pay raises and additional benefits for city workers and the city's spending to try to deal with the ongoing homeless crisis.

Now, with the massive shutdown of businesses locally, layoffs and furloughs pushing a huge uptick in unemployement, and a huge downturn in tourism and the cancellation of big ticket events, Los Angeles, like other cities, is facing a big decision when it comes to the new budget.

In the last few years, L.A. has seen a growth to its general fund because of taxes on everything from hotel stays and entertainment, to goods and services and home sales. That fund helps to pay for services like police, firefighters and other public safety. Right now, there's not a lot flowing to that fund because of the stay-at-home order. Earlier this week, Ron Galperin, the City Controller said that this year, L.A. could be down as much as $600 million in that fund, and that will have a huge impact on all of Los Angeles.

Bottom line, it's REALLY difficult to plan a budget right now, because we don't know when this current crisis will end. Once the crisis is over, we can expect to see money flow back into the fund, but how much and how fast that will happen is unknown.

Because of that, layoff and furloughs are likely a certainty. Chrisopher Thornberg, founding partner of Beacon Economics, the company hired to assess L.A.'s finances told the L.A. Times that L.A. wasn't:

"exactly on good fiscal ground in the first place."

He believes the economic impact to L.A. will be 'deep but short-lasting' and that the bulk of city revenues would start to return in the 'first half of 2021.'

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