Page 458 - 2020-21 Budget Summary

March 2, 2020

Honorable Mayor Eric Garcetti
Honorable Members of the City Council

Re: Revenue Forecast Report

Each year, in accordance with City Charter Section 311(c), my office submits a Revenue Forecast Report,
which includes information gleaned from City departments, recent regional economic reports and
meetings with local economists. This report covers updated revenue estimates for the remainder of the
current fiscal year — ending June 30, 2020 — and projections for fiscal year 2021. Although forecasts
inherently involve some uncertainty, this report offers our best estimates based on the available
information and seeks to promote responsible budgeting in the year ahead.

The City’s adopted budget this fiscal year totals $10.71 billion. Two-thirds of that, or $6.57 billion, is
comprised of General Fund revenues, while the balance, $4.14 billion, comes from hundreds of special
purpose funds. Our updated estimate of General Fund receipts for the current fiscal year is $6.61 billion,
slightly higher than the budgeted amount and a six percent increase over the last fiscal year. Revenues
from property and cannabis business taxes are higher than expected, but will be offset by projected
shortfalls in telephone users tax and transient occupancy tax (TOT) receipts.

The cannabis industry is projected to remit $84 million in business taxes to Los Angeles this year, in
addition to $30 million in related sales tax receipts and $14 million from cannabis permit fees. These
amounts should continue to expand if the City is able to move forward more expediently in its efforts to
permit new cannabis businesses and better enforce against illegal sales.

For fiscal year 2021, General Fund receipts are projected to be $6.82 billion, 3.2 percent more than the
current year. The revenues driving the current year’s growth should continue to increase, but be partially
offset again by the telephone users tax, which has dropped by 50 percent over the last decade.

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