Santa Clarita businesses suffered a total revenue loss of more than $300 million, while others permanently closed in 2020, painting a clear image of the economic turmoil brought forth by the COVID-19 pandemic, but city officials announced Tuesday hope is on the horizon.
At the start of the coronavirus crisis, sales tax revenue was projected to drop in the double digits, and it did at 13%, or $3.2 million last year.
“I want to emphasize the sales tax revenue collected by the city is only 1%,” City Manager Ken Striplin said in a budget meeting before the City Council and commission members. “As you look at what is the economic impact of that loss beyond our $3.2 million, you’re looking at a total loss of revenue to local businesses of $300 million. So, definitely a very significant number.”
Much of the loss in revenue comes after unwavering health orders that forced major industries, ranging from restaurants to retail, to shut down or implement a series of changes.
Santa Clarita is also facing an unemployment rate of 9.3%, which falls just below L.A. County’s rate of 10.7%. At the peak of the pandemic over the summer, Santa Clarita had reached a rate of 20%, according to the state’s Employment Development Department. There are now 109,400 jobs across the city, a number that dropped from 114,000 in 2019, according to Striplin.
“The longer we remain in this crisis, the more prolonged the impacts will be felt and the longer the recovery will take,” said Striplin, adding that the city is forecasting a significant increase in “online sales coming back to the city.” The new projected sales tax is expected to bump back up to $39 million, “which is just shy of our original projections pre-COVID.” The 2020-21 sales tax was $32.1 million.
“This illustrates that consumer confidence is still intact, and hopefully spending locally will resume once businesses can fully reopen,” said Striplin. “Our local businesses have a long road to recovery, and some have closed their doors. With that said, all these indicators of the global, national, state and local economy give me confidence and optimism especially in the second half of 2021.”
These figures are part of the city’s first look into its six-month budget process for the 2021-22 spending plan, which also includes preliminary figures such as a $116.8 million general fund, and $116.4 million in total expenditures, of which public safety makes up the largest budget (26%) with more than $30 million. Federal relief funds, which the city used to offer personal protective equipment to essential workers, as well as aid other local nonprofits and agencies, “helped the city keep its emergency reserve fully intact, which is at 20% or just under $18 million the current year,” said Striplin.
Besides its key issues to focus on in the new budget year — such as homelessness, public safety and finishing new facilities — the city will continue to adjust to ongoing COVID-19 developments.
“In the best-case scenario, vaccines are widely available in the spring and the economy can be again reopening in the summer,” he said. “If that happens, we will be working with L.A. County closely to navigate through the changes and adjusting protocols, both internally as well as throughout the community.”
After a series of budget meetings, the City Council is expected to adopt the new budget on June 22.