Page 450 - FY 2021-22 Proposed Budget

General Fund receipts for FY22 are projected to be $6.4 billion, an increase of 4.4% over FY21
estimates. The revenues growing in the current year should continue to increase, along with 5.8%
growth in business tax receipts and a 6.7% increase in sales tax receipts. Transient occupancy tax
receipts are likely to increase in the second half of FY22, but will remain well below pre-pandemic
levels. This revenue category has been hit the hardest by COVID-19 as travel and hospitality slowed
to a near stop once the pandemic took hold and is expected to take the longest to recover.

Long, winding road to recovery

Although my office is not assuming an overly aggressive timetable for economic recovery, it is
entirely possible that the recovery may not happen that quickly. If the pandemic worsens in the
coming months, next year’s revenues could come in lower, perhaps considerably lower, than
projected in this forecast. However, despite a year of uncertainty, the available local and national
data give reason for encouragement. More stabilization in our local economy leading to eventual
upward trends is quite feasible in the coming months, provided the pandemic continues to subside. If
that comes to pass, recovery will be a long and winding road, to be sure, but steady growth should
happen over the course of FY22.

Another factor that looms large when discussing the City’s recovery is the prospective infusion of
additional federal and state relief funds, which would bolster L.A.’s coffers considerably. Under the
current plan before Congress, the City could receive more than $1.2 billion to replace lost revenue,
protect core services and assist with pandemic response efforts. Because this relief funding has not
yet been secured, it is not included in my office’s revenue projections.

Even with external funding, there is no doubt about it — the end of this fiscal year will be tough and
troubling for the City’s finances, making the coming budget process even more difficult than the last.
Despite the very real prospect of recovery in FY22, no promises can be made at this time, only
projections based on the economic and public health information at the City’s disposal. For this
reason, the City must enter this budget season with a careful, deliberate eye on maintaining services
to the extent possible during this trying time.

Explore the Revenue Forecast Report, along with an interactive dashboard and charts, at
lacontroller.org/revenueforecast2022​.

Sincerely,

RON GALPERIN
L.A. Controller

cc: Sharon M. Tso, Chief Legislative Analyst
Richard H. Llewellyn, City Administrative Officer

418