Page 14 - FY 2021--22 Revenue Outlook

In addition to the receipt of federal funds, the budget assumes the widespread
availability of COVID vaccines will soon bring an end to the pandemic, with herd
immunity achieved by the end of July. Although parts of the country are currently
experiencing an uptick in infections and hospitalizations, and notwithstanding the
risk of a more virulent COVID variant, no additional closures are presumed.
Revenue estimates assume varying degrees of recovery in monthly receipts,
depending on the underlying economic drivers that would constrain or boost
growth. Additional details and assumptions are provided below, with forecast
estimates included in the General Fund Outlook Table and Assumptions in this
Section, and with monthly and prior-year data in Sections 2 and 3.

2021-22 Revised General Fund Revenue

Total revised General Fund revenue for 2020-21 is $7.02 billion, an increase of
5 percent ($336.6 million) above adopted revenue that includes the receipts from
one-time federal funding totaling $880.6 million. Without this funding, the City
would be confronted difficult decisions under a more austere budget. Excluding
federal relief funds, budgeted revenue is expected to end the year at
$6.14 billion, $544.0 million (-8.1 percent) short of adopted receipts.

Adopted General Fund revenue for 2020-21 was $6.69 billion, an estimated
increase of 1.8 percent from 2019-20 adopted revenue, but 4.9 percent above
actual receipts due to a $195.5 million year-end deficit. The deficit, attributed to
the first pandemic closures in 2019-20, created a substantial shock to travel,
business and home sales activities; halted City services; and prompted initial
relief measures for owed taxes, fees and fines. The impact to 2019-20 final
quarter receipts foreshadowed the toll it would have on 2020-21 revenues. At
the mid-year point of 2020-21, based on data through January 2021, the City
anticipated falling $600 million short of adopted receipts. This estimate has
slightly improved to $544.0 million or 8.1 percent below adopted receipts. The
federal funds received to date and expected to arrive later this fiscal year have
fully addressed this revenue shortfall.

Representing approximately 70 percent of General Fund’s core revenue base are
seven major taxes: property, utility, business, sales, document transfer, and
transient occupancy and parking occupancy, all of which are vulnerable to
declines during an economic downturn. Since 1990 actual receipts from these
sources have averaged 3.7 percent growth, yet, during the second year of the
Great Recession these combined receipts declined 4.8 percent. The $544.0
shortfall includes pandemic-related losses for the economy-sensitive revenues
totaling $280.6 million in the transient occupancy, parking occupancy, sales,
property, business and utility users taxes (-$144.1 million, -$45.1 million, -$40.9
million, -$33.8 million, -$9.6 million, and -$7.1 million, respectively). The net
decline in all seven taxes is -2.3 percent, nearer to the loss seen after the
1990-91 recession. While the drop in tourism, business closures and job loss

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