L.A. County Releases $35.5 Billion Budget, Warns of Cuts to Come

Los Angeles County officials released a $35.5 billion proposed budget Monday, but immediately acknowledged that major revisions would be coming as they maneuver through the fallout of an unprecedented pandemic.

County CEO Sachi Hamai is projecting a $1 billion drop in revenues this fiscal year, set to end June 30, and estimates that revenues will decline by another $1 billion-plus next year.

“This is a budget process unlike any we’ve ever faced before, even in previous downturns,” Hamai said in a statement. “Although the county has its strongest fiscal foundation ever, thanks to our long history of prudent budgeting and investments in our Rainy Day fund, we are in a profoundly challenging economic environment that may get worse before it gets better.

“There are many factors outside the county’s control, including the length and severity of the COVID-19 crisis, and the amount of assistance we will receive from the state and federal governments,” Hamai added.

The budget proposal — set to be reviewed by the Board of Supervisors on Tuesday — was drafted before the current crisis, making it hard to draw any conclusions about how the county’s priorities might shift going forward.

The process for finalizing the budget takes months during a typical year, with revisions made before the budget is adopted in June and then additional changes made before the budget is finalized in September.

Current recommendations emphasis health and mental health programs, including funding for more inpatient mental health beds. The proposed budget also focuses on developing and preserving affordable housing, in line with the county’s efforts to mitigate homelessness.

Measure H sales tax revenues, which are used to fight that battle, are likely to decrease as a result of the economic downturn triggered by the global pandemic.

“In fact, all recommendations in the proposed budget are likely to be reconsidered, given the deep uncertainties ahead,” according to a statement released by the county.

“We are hoping for the best but preparing for the worst as we chart the course ahead,” Hamai said. “As always, we will prioritize vital services to the public and our essential role as the safety net for our most vulnerable residents.”

The Board of Supervisors has already frozen hiring for all non- essential positions and asked department heads to prepare for program cuts in the year ahead.

The county does expect to close out the fiscal year with nearly $200 million in cash, though that reflects a drop of $950 million from earlier projected levels.

The county’s economic health relies in large part on federal and state funding that is also at risk. Los Angeles County officials have joined with the National Association of Counties to advocate for full reimbursement of COVID-19 expenses by the Federal Emergency Management Agency. NAC has also asked the federal government to allow municipalities to use funding from the federal coronavirus relif bill to offset revenue losses.