Besides its devastating health impact, the COVID-19 pandemic is hitting the local economy hard as well.
The City of Long Beach will suffer a total revenue loss of between $38 million and $44 million by the end of 2020, according to an April 13 memo from the Director of Financial Management John Gross.
Gross projects the City’s general operating-fund budget to fall short by $14 million to $22 million this year, especially due to reduced oil sales and hotel taxes.
Gross further projects the Long Beach Airport to lose $10 million in revenue this year due to low passenger volume.
The City’s costs related to COVID-19– including setting up an incident-management team and emergency-operation center– amounted to about $5.5 million by the end of March, Gross said. He added that some of those costs may not be reimbursable by state or federal funds and do not include deferred rent, tax rebates or loans to assist businesses.
The current pandemic’s financial impact will also result in future-year budget losses of up to $27 million through 2024, Gross said.
Further impacting the City’s ongoing financial woes are litigation preventing Measure M’s transfer of water-and-sewer revenue to the general fund, higher pension costs and lower pension-related investment earnings and higher labor-agreement costs.
Gross added that future-year budget projections also do not consider an economic slowdown, which may now be more likely following the pandemic.
The City is currently taking steps to control costs, such as reducing one-time projects and non-pandemic and non-essential operating expenses, including staff hiring, Gross said.
However, the financial strain on the City may be understated because projections assume the pandemic will last through the end of May and be followed by a very strong economy after a recovery period of the rest of 2020 and early 2021.
“Because these assumptions may turn out to be optimistic,” Gross said, “the City should be prepared for more adverse impacts than this initial assessment indicates.”
Economic relief
To help mitigate the financial impact of coronavirus-isolation measures on workers and small-business owners, the Long Beach City Council unanimously adopted an economic-relief package during its April 14 meeting.
The relief package includes specific steps that the City will take to cover gaps in federal relief measures and help workers and business owners continue functioning during the pandemic emergency.
Among the measures, the council will approve an ordinance once the city attorney drafts it requiring Long Beach employers with more than 500 employees nationwide to give their employees supplemental sick leave of up to two weeks.
Supplemental sick leave for workers in companies with 500 or fewer employees is already covered by the federal Families First Coronavirus Response Act.
To help the local hotel industry specifically, the City will create a Hospitality Recovery Task Force to develop strategies for recovering business travel and tourism, according to an April 15 statement from Long Beach’s Joint Information Center.
Hotel and janitorial workers who have been laid off will be protected by worker-retention and rehire policies once the council approves an ordinance for that.
The City’s new Emergency Microloan Program will help small businesses and nonprofit organizations that cannot obtain federal loans to operate during this time.
For businesses and homeowners, the City will also develop a mortgage-assistance program with the help of nonprofits and development companies. And it will assist mortgage holders in accessing state and federal programs to prevent foreclosure.
The City already created a checklist of new protocols that essential food and grocery businesses had to post as of April 15 to help ensure the safety of both customers and workers, such as keeping six feet apart in checkout lines.
The City is also assisting those in quarantine with over $1 million in grants through nonprofit partnerships.
During the council meeting, which was conducted by teleconference, City Manager Tom Modica highlighted 12 key areas from an approximately 150-page report developed by the Economic Development Department under Director John Keisler. The council had requested a report on how to maintain economic resiliency at its March 17 meeting, the same week it issued its “safer at home” policy.
In addition to the above items, the report’s guidelines include training hotel and restaurant workers in COVID-19 safety precautions, staggering fees for small-business development and promoting digital inclusion by helping residents and businesses with internet access, hardware and training.
During its discussion, the council specifically addressed whether franchises should be included in the definition of companies of 500 or more and how long the policies would remain in place. It agreed that franchises should be included and that staff would update the council every 90 days.
The council also agreed that employers must allow workers to adjust their schedules for coronavirus-related issues, such as childcare and helping family members who are ill. Employers must also give part-time workers full-time hours before hiring any additional workers, the council agreed.
Many of these policies echo those of the County of Los Angeles and the City of Los Angeles (LA) as well, according to the staff report. LA alone is projecting a $231 million revenue loss this year and $598 million next year, according to an April 15 statement from LA Controller Ron Galperin’s office.
LA projects its travel and tourism income to fall by 70%, with tax revenue down by $61 million this fiscal year and up to $80 million in 2021.
Long Beach Mayor Robert Garcia said during the council meeting that LA and Los Angeles County are adopting similar economic-relief packages and that the council will periodically update Long Beach’s policies and health orders to align with those other agencies.
“I’m proud that this economic-relief package protects workers and small businesses,” Garcia said in a statement. “Long Beach residents deserve paid sick time during this health crisis and our small businesses need loans and access to grants.”
For more information, call the Long Beach COVID-19 hotline at (562) 570-INFO (4636) or visit www.longbeach.gov/covid19. For business and worker information, call (562) 570-4BIZ (4249) or visit www.longbeach.gov/economicdevelopment/covid-19-business-support/.
