A recovering economy has budget officials optimistic about closing a $25.6 million deficit • Long Beach Post News

The Long Beach Recovery Act passed by the City Council in 2021 provided the city with more than $200 million in state and federal aid that helped pay rent for tenants and establish a host of programs designed to help the local economy to rebound for the COVID-19 pandemic.

It also included about $77 million to replenish the city’s reserves, which were tapped to help meet unforeseen shortfalls caused by the pandemic shutdowns. With sales tax revenue and a booming real estate market, that money lasted longer.

A presentation given to the city’s budget oversight committee on Tuesday afternoon showed that property taxes and sales tax, the city’s two main sources of revenue for the general fund, are expected to rise in the next fiscal year, adding a total of $20.3 million to the city. coffers. The city’s fiscal year runs from October to September.

Grace Yoon, the city’s budget officer, said the sales tax was really the surprise area given that budget planners expected it to be hit the hardest during the pandemic.

“A lot of sales haven’t suffered; people kept buying things,” Yoon said, noting that auto sales and spending on home improvement projects had increased during the pandemic.

Still, the city will have to find $25.6 million in savings over the next year or else city services could face deep cuts starting next year, when bailout law funds should dry up.

City officials said earlier this month they expect the deficit to continue to shrink, as it has in recent years, as the city uses stimulus funds to “dismiss the issue” on the road, which Yoon reiterated on Tuesday.

But two things have changed since then that could make balancing the 2024 budget more difficult: The city lost a lawsuit that forced it to repay $30.8 million to the water department by September , and the city will finally start paying for the countywide measure. H homeless tax.

The Measure M lawsuit will result in about $7.5 million less being injected into the city’s general fund each year. To pay for the transfer to the water utility, city officials told a press conference last week that it could take out a loan from the city’s fleet division rather than issue judgment bonds so that the interest paid goes to the city, rather than to the bond market.

The decade-long Measure H homeless tax approved by voters in 2017 to fund homeless services in the county benefited Long Beach, but as the city’s tax rate was capped with the adoption of measure A in 2016, the inhabitants of the city never contributed to it. .

When Measure A was re-approved and made permanent by voters in 2020, the wording of the measure provided for Measure A to be reduced from 1% to 0.75% for the remainder of Measure H.

This year, that could mean more than $15 million of funds that could have stayed in Long Beach will now go to the county, according to city projections.

Other funds are also seeing a rebound, including the Transient Occupancy Tax ($2.4m) which is collected through hotel stays, which budget officials said they expect to return. to pre-pandemic levels in 2024.

Local taxes and fees charged to cannabis business operators in the city are expected to generate $12 million this year, up from about $9 million forecast at the start of this fiscal year. However, there is a movement within the cannabis industry to see these taxes lowered over the coming year.

In addition to the projected budget shortfall next year, Long Beach will also have to negotiate employment contracts that expire at the end of September.

This year, wages were already set to increase by $19 million and the city still has to sign agreements with the fire and police unions. The two departments account for about 58% of the city’s general fund budget of $669 million this year and a cost-of-living increase will likely be included in future contracts for both departments.

Long Beach unveils its budget for the coming year; here are 5 takeaways

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