With a projected shortfall of $15 million this fiscal year in its $203 million budget and of more than $20 million in the fiscal year that begins July 1, the City of West Hollywood is cancelling city-funded and city-sponsored events, freezing vacant positions, reducing discretionary spending by 15 to 20% and issuing bonds to borrow money to pay for capital projects to ensure that it is able to keep some cash in reserve.
The revenue shortfall is the result of the COVID-19 pandemic’s impact on local businesses, particularly hotels.
A report to the City Council’s Finance and Budget Subcommittee, whose members are Mayor John D’Amico and City Councilmember Lindsey Horvath, notes that all but four of the city’s 21 hotels currently are closed because of the pandemic. The hotel room tax generates the largest percentage of revenue (37%) for the city’s $113.2 million General Fund, which is the part of the budget that funds most city operations and administration. The city had anticipated hotel room tax revenue of $29 million this fiscal year but now expects to receive only $21.6 million.
Other revenue shortfalls are sales tax, down 9% from the $17.6 million budgeted; parking fines, down 18.7% from the $7.5 million budgeted; parking meter revenue, down 27% from the budgeted $8.4 million, and revenue from miscellaneous other sources, down 6.9% from the $23.3 million that was budgeted. The decline in sales tax revenue is a result of the closing of restaurants, hotels and shops. The loss of combined loss of $3.7 million in parking fines and fees is the result of the City Council’s decision to suspend such fines and fees and also a result of the decline in tourism.
The report estimates a decline in hotel room tax revenue of $7.5 million if hotels remain closed through the rest of this month. A slow re-opening in June is likely to generate only 25% of the revenue that came from the room tax in June 2019, it says. The report cites a study by Visit California, the state’s tourism promotion organization, that says the travel and tourism industry will hit bottom in the next five to six months and begin to recover in early 2021. However, HVS, a hotel industry consulting firm, predicts that it will take four more years for room occupancy rates to the 2019 levels.
Other steps the city intends to take to reduce spending in the coming fiscal year include reopening a retirement incentive program to encourage some long-serving employees to retire and postponing non-essential capital improvement projects. The report doesn’t specify what those projects might be.
City employees for the most part are working from home, with the City Council having authorized $150,000 to improve access by phone or internet for residents and city staffers. The city’s Code Compliance officers are assisting Sheriff’s deputies to patrol the city, the report says. Parking Enforcement staff is working with Cedars-Sinai Medical Center to manage traffic at its COVID-19 testing site on Alden Drive.
The Budget and Finance Subcommittee, which traditionally is held in private, has been opened to the public after WEHOville alerted the City Clerk and City Attorney to rulings that such meetings no longer could be held in secret. The City Council is required to adopt the 2020-2021 fiscal year budget in June.
The meeting will be conducted as an audio teleconference and will take place from 4 to 5 p.m. on Tuesday. To listen, dial into the meeting at (669) 900-6833 and enter the Meeting I.D. 952 0353 3509 then #.
The meeting is open for public comment. To participate by phone email City Clerk Yvonne Quarker at firstname.lastname@example.org in advance of the teleconference to be added to the public speaker list for the meeting. Include your name and the phone number from which you will be calling. If you are unable to email the City Clerk call (323) 848-6408 no later than 2 p.m. on Tuesday and provide your name, the phone number from which you will join the meeting, and state that you wish to be added to the public speaker list.
Comments from members of the public are limited to two minutes per speaker. Members of the public wishing to participate in the meeting will enter the call on mute to listen and be unmuted during the public comment portion of the meeting. Current and prior-year copies of the city’s budget are available online at www.weho.org/budget and City of West Hollywood’s Open Data portal includes a page dedicated to the budget at www.weho.org/data