LOS ANGELES, CA – Today LA Councilmember Bob Blumenfield introduced a resolution calling on the California State Legislature to provide one-time funding of $2 billion in direct assistance to local governments to help replace COVID-19 related revenue shortfalls. Due to the ongoing impacts of the pandemic, many cities are facing crippling deficits with impacts that could be felt for generations.
“We can’t spend money we don't have, but our colleagues in the State are in a position to help our shared constituents,” said Blumenfield. “This isn't just about saving the jobs of hard working civil servants, this is about making sure the public is kept safe, that critical services are delivered, and that local government doesn’t get irreparably hollowed out during this historic fiscal crises.”
As the City of Los Angeles is facing at least a $675 million budget shortfall, other cities across California share a similar bleak reality. The City of San Diego has a projected deficit of $86 million and the City of San Francisco budget shortfall is around $116 million. Because local government services rely heavily on workers who deliver critical services, big cuts in spending invariably can mean layoffs and furloughs. Because the employees who are most at risk of losing their jobs are often the more recent and more diverse employees, the cuts have a compounding equity impact.
The City of Los Angeles Chief Administrative Officer proposed a 3% cut in every department which is on top of severe cuts already made earlier in 2020. Several departments could not achieve that percentage without layoffs, therefore LAPD, Animal Services, Engineering and City Attorney, have proposed eliminating 1,894 positions which would result in drastic service reductions and threaten public safety. Because LA is not alone in this crisis, tens of millions of Californians will see cuts to critical community services including public works projects, law enforcement, and emergency services, unless the legislature steps up to help.
When services are dramatically cut it can negatively impact business and result in even greater tax revenue losses. Blumenfield explained, “For businesses in the City and State to recover economically, they need to know that their garbage will be picked up, that the streets will function, that the sewer in front of their business will get repaired quickly, that that police and firefighters will show up when needed, and that the City will process whatever permits they need expeditiously. When these services get hollowed out, the economic engine that drives our economy gets stalled. “
The relative health of the state budget results from surprisingly strong state funding streams, the opposite of cities revenue streams which fizzled due to the stay-at-home order and travel restrictions (TOT, parking taxes, parking fines, and the SPRF transfer). Cities have been harmed indirectly by the ripple effects of impact to the economy (sales, business, property and utility user’s taxes). Reduced demand and reimbursements for City Services (department receipts) have also fallen. The City of LA has spent its own shrinking funds to fight the pandemic, some which will not be reimbursed. In December 2020, it was projected that the City had to spend at least $1.2 billion toward fighting the impacts of COVID-19, with more expenses to come in 2021.
Right now the state is beginning to allocate the current surplus of upwards of $26 billion to various projects including rental relief and much needed assistance to restaurants and local businesses. The state legislature recently reconvened for a new session and members have already begun authoring proposals of where some of this surplus should be spent. The one-time funding they have to spend could provide an essential life raft for local governments to prevent draconian budget cuts and layoffs of public safety and other city workers.
Blumenfield concluded, “As a former member of the State Assembly, and Budget Committee Chair during the previous recession, I have a firm understanding of the tough choices that must be made and I know that funding cities is outside of what is normally considered, however this crises is like no other we’ve seen before and the ripple effect of cities financially imploding will dramatically impact the entire state and can be prevented with a strategic one-time expenditure.”