Supervisors Worry Budget Cuts Will Hurt LA County's 'Post-Pandemic World'

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L.A. County Supervisors have taken the first step in what's expected to be a painful fiscal year 2020-21 budgeting process.

At Tuesday's board meeting, CEO Sachi Hamai explained via teleconference that nearly every part of her $35.5 billion budget recommendation will likely have to change in the coming weeks. The plan was written before COVID-19 became a worldwide pandemic, shutting down the economy and downsizing tax revenue.

So far the county has dipped into its reserves to cover a $1.3 billion shortfall for the current fiscal year, primarily due to lost sales taxes while the region is mostly at a standstill. But the new budget kicks in July 1 -- and it brings another billion-dollar gap to fill.

Tapping the rainy day fund also leaves the county with around a $200 million cash balance, which Hamai called an "extremely narrow margin to have in our checking account." That balance was supposed to be over $1.1 billion, before the coronavirus crisis chewed a gaping hole through pretty much everything.

BACK TO THE DRAWING BOARD

The Supervisors voted to approve the recommended budget as it stands, while Hamai said her team is going back to the drawing board, looking for places to whittle down spending and asking department heads to come up with possible savings.

But without new sources of revenue coming in, like state or federal bailout money, the county may be forced to enact major cuts to social services, mental health and/or housing programs, right when a recession is cresting and they're most needed to get L.A. County residents back on their feet.

Measure H, the county's voter-approved sales tax that funds homeless services, has been hit hard by stay at home orders: it's predicted to be short about $150 million over the next two years.

Contributions to the affordable housing trust fund could be a target of cuts, Hamai acknowledged.

But Supervisor Sheila Kuehl said her focus in shaping the budget would be to maintain the county's "momentum" in areas like housing support and alternatives to incarceration.

"That's not a done deal. We really take into account the fact that this is one of the solutions for people to be able to recover," Kuehl said, adding, "We have to think about our post-pandemic world, and be prepared with vital resources"

SHARED PAIN

Los Angeles is not alone: local governments around the country are clamoring for more federal dollars. Last month, Congress approved $150 billion to help, but that money can only be used to reimburse cities, states and counties for direct emergency spending responding to COVID-19, not bridge revenue shortfalls, which could exceed $500 billion nationwide this year alone.

Mayors, governors, and county leaders are calling for more flexibility to use that money how they see fit -- along with more overall dollars. But they'll have to wait until the next round of stimulus money to find out what will materialize.

If help doesn't appear, the county could be looking at reductions of 15% to 20% of its overall budget, Board of Supervisors Chair Kathryn Barger said at a briefing Monday.

Hamai stresses revenue predictions are still "fluid." The CEO said she will return in June with "substantial" budget revisions.