The California Legislative Analyst’s Office today published revised budget projections, and projects revenue declines of approximately 25% for the State of California. While local governments have different funding sources from the State of California, which levies sales, business, and income taxes, California’s revenue projections are a cautionary tale for every local government. The State of California anticpates roughly equal declines across every type of tax, which indicates that most local governments will experience similar broad based declines in revenue as the Covid-19 pandemic regardless of their funding model.
It is important to note that as certain business closures and social distancing restrictions are eased, these projections may become less dour, but may also result in dramatic fluctuations by revenue source. In the next part of this series I will examine the local government toolkit for managing fluctuations in revenue as a result of Covid-19.