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Coronavirus Recession Will Not Impact Cities Equally

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Closed storefronts in Los Angeles's fashion district. (Chava Sanchez/LAist)
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This is no ordinary economic downturn, and it's not going to hit cities equally.

With a strong tourism and hospitality sector, for instance, "I would have used Santa Monica as a poster child for how some cities have really good financial DNA," said Bill Statler, a municipal finance consultant who spent decades working for the city of San Luis Obispo.

Last month, Santa Monica's city manager was pushed out of his job after his proposed budget cuts elicited massive public outcry. Now the city is considering laying off 337 workers.

If there's any type of California city best suited to weather the current recession, it's bedroom communities.

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"Those cities that are highly reliant on property taxes and not sales — it's not to say that they won't suffer, but their treasuries won't get depleted immediately," said Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.

The divide between municipalities that rely heavily on property values versus those that do not is a Tale of Two Cities. According to a CalMatters analysis of municipal tax revenue data from 2018, the cities that rely most on property taxes are Mountain View, Pleasanton, Newport Beach and San Clemente — all wealthy.

Cities that are dependent on sales and hotel taxes are more of a mixed bag, with some well-to-do tourism destinations, but also many working- and middle-class towns with below-average incomes or cooler housing markets: South Gate, Hemet, Merced, Redding.

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