L.A. County: more than $2B in sales tax revenue loss projected due to COVID-19

FILE PHOTO Fifth District Supervisor Kathryn Barger speaks at the Hyatt Regency Valencia. Eddy Martinez/The Signal.

Los Angeles County projects a loss of more than $2 billion in sales tax revenue through 2021 and estimates spending about $600 million in COVID-19-related expenses, thus far, officials said Wednesday. 

County Supervisor Kathryn Barger and CEO Sachi Hamai offered a brief snapshot of a challenging year and, perhaps, years ahead, brought forth as a result of the novel coronavirus outbreak that has kept residents under an extended safer-at-home order and shut down most businesses. 

Based on state and county data, these directives are working in flattening the curve and paving the way toward easing restrictions, but it is taking a toll on the economy as fewer consumers are shopping for nonessential items, taking public transportation and contributing monetarily as they normally would.  

“We are cautiously optimistic because our efforts are showing results. Physical distancing does work, and we are seeing the numbers come down,” said Barger. “We know with the safer-at-home (directive), we are not getting sales tax and we know there’s going to be a larger hit the longer we stay closed.” 

In 2019, the county’s sales tax revenue totaled $5.9 billion, but by June 30, 2021, the forecast shows a decline of more than $2 billion, according to Hamai. By the end of this fiscal year, the projection is a loss of $1 billion. 

“For the county, there’s potentially a loss in billions of dollars in sales tax revenue to fund vital public services,” she said, including child and social services, public health and safety, and for the homeless. 

Barger, whose 5th District covers the Santa Clarita Valley, said she was “pleasantly surprised” that “a little under 95% (of county residents) did, in fact, pay their property taxes.” 

The county has already established “hard” hiring and expense freezes, as its departments prepare forecasts for budget cuts of 10%, 20%, or 25%, said Barger. 

L.A. County’s projections mirrored other governments’ challenges as leaders expressed during a Wednesday morning conference call with the National Association of Counties, or NACo. 

“The concerns that we have are that there are few ways that we can go about closing these gaps on our own,” said George Latimer, county executive for Westchester County, New York. 

In a recent letter to President Trump, NACo urged the federal government “to provide direct and flexible funding to county governments who are at ground-zero of this unprecedented public health and economic crisis.”

Los Angeles County has already secured more than $20 million in federal funds through the coronavirus relief package, or CARES Act, of which $13.6 million is expected to go toward rental and business aid and protection for retail and food delivery workers.

Officials’ concern is that CARES Act funding “is not for loss of revenue,” said Hamai. 

“We recognize we have a long way to go. It is more important than ever for us as counties to communicate to our federal partners that we are truly on the front lines of this fight, both financially but also as it relates to the health and welfare of our constituents,” said Barger. 

For all local coronavirus-related stories, visit: signalscv.com/2020/03/covid-19-coverage-summary.

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