Each year, in accordance with City Charter Section 311(c), the Controller’s Office submits a revenue report that includes information gathered from City departments, recent regional economic reports and meetings with local economists.
The Revenue Forecast 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 estimates based on the available information and seeks to promote practical and responsible budgeting in the year ahead. Also included in the report are the estimated requirements for debt service and General Fund cash flow borrowing.
Use the dashboard below to explore actual receipts for last year, FY20, projected revenues and their sources for FY21 and 22, and compare last year’s budgeted and actual revenues to the estimates for this and next 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. The 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. Property tax revenues likely 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.
While the economy remains unsettled given the ongoing public health crisis, based on the widening availability of vaccines, the Controller’s 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.
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.
This chart breaks down total City revenues in all categories (General Fund and special funds) from 2010 to 2020, along with revenue projections for this fiscal year and the next. Filter by category or by name of revenue source.
Although the Controller’s 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 the 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, 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 these revenue projections.
Even with external funding 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 go into this budget season with a careful, deliberate eye on maintaining services to the extent possible during this trying time.
The estimated City debt service requirement for fiscal year 2022 is $568.1 million, including $119.3 million is for principal and interest payments on the City’s $772 million in outstanding General Obligation Bonds. In total, debt service is projected to be 4.97 percent of projected 2021-22 General Fund receipts, well under the 15 percent limit set by the City’s Debt Policy.