Page 449 - FY 2021-22 Proposed Budget

March 1, 2021

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 gathered 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, 2021, and projections for fiscal year 2022.
Although forecasts inherently involve uncertainty — as exemplified by the experience of the past 12
months — this report offers our best estimates based on the available information and seeks to
promote practical and responsible budgeting in the year ahead.

This Fiscal Year

The City’s adopted budget this fiscal year, FY21, totals $10.53 billion. Two-thirds of that, $6.68
billion, consists of General Fund revenues, while the rest, $3.85 billion, comes from hundreds of
special purpose funds and available balances. Our updated estimate of General Fund receipts for
the current fiscal year is $6.14 billion, 8.3% lower than the budgeted amount and 3.7% below the last
fiscal year. This means the General Fund will have a $549 million revenue shortfall. We anticipate
that property tax revenues will increase by 6.1% and cannabis business taxes by 79% ($139 million),
but will be offset by dramatic shortfalls in transient occupancy tax (down 66%), parking occupancy
tax (down 44%), and telephone users tax (down 15%) receipts, among others.

Next Fiscal Year

While the economy remains unsettled given the ongoing public health crisis, based on the widening
availability of vaccines, my office is cautiously optimistic that the overall economic recovery could
start slowly this summer around the beginning of FY22, which would also lead to an uptick in City
revenues.

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