COVID-19 will have both short-term and long-term impacts on local government. On April 19, 2020, Los Angeles Mayor Eric Garcetti delivered his annual “State of the City” address, this year focusing on how COVID-19 is affecting the city in real time as well as the severe anticipated economic impact of the virus on the city. According to Garcetti, the city is “under attack.” Below, we provide the salient details of the State of the City and how COVID-19 is fundamentally altering the City’s short- and long-term economic prospects.
Budget and Finance:
The Mayor indicated that Los Angeles is facing its worst fiscal situation in history:
- Revenues are down significantly. For example, airport passenger traffic is down 95%.
- The city has borrowed $70 million to date from its Special and Reserve Funds to front the costs related to its COVID-19 response.
- Unemployment is expected to surpass the Great Recession’s 13.4%—preliminary April numbers show approximately 300,000 unemployed in Los Angeles and rising.
- A report released last week by City Controller Ron Galperin indicated that revenue for the coming budget year could be as much as $598 million below projections.
In response, the Mayor outlined several steps he has taken:
- City hiring freeze.
- Civilian employees will take 26 furlough days over the course of the next fiscal year (the equivalent of a 10% reduction in pay).
The Mayor’s proposed budget was also released. It includes significant cuts across the board. He indicated that there will be deeper cuts to more discretionary programs:
- “Recreational and community services” will likely see major cuts.
- The city will have to “spend less on removing graffiti and caring for our urban forest.”
- The budget will focus on what the Mayor called a “back to basics” program:
- Public safety
- Sanitation and keeping our streets clean
- Homelessness and housing
- Food assistance for children and seniors
COVID-19:
The Mayor announced five key pillars for when the city can begin to reopen:
- Testing, both for the virus and for its antibodies
- Real-time dynamic monitoring to see where cases are
- An immediate tracking and tracing response to quarantine people so that the virus can’t spread to others
- Building and maintaining hospital capacity, both the human talent of nurses, techs, and doctors, and the equipment and supplies so they can safely treat the worst cases
- Ongoing research and development into treatments and a vaccine for this disease
The Mayor also announced the formation of CARES Corps, “a coalition of local governments and health agencies, medical professionals and businesses, backed by federal funding and built to combat COVID-19 and to accelerate our economic recovery.” The purpose of the corps would be to:
- Short term:
- Lead contact tracing efforts
- Deliver food to vulnerable populations
- Support testing sites
- Build and staff shelters
- Assist small businesses
- Long term:
- Address systemic disparities in access to medical services
- Incentivize careers in high-need fields
- Train corps members in disaster response
- Cross-train individuals from the public, nonprofit, corporate and independent sectors to support essential services during emergencies