Bay Area Braces for Budget Hits from Loss of Tax Dollars

As the statewide stay-at-home order extends into May, cities and counties across the Bay Area are beginning to see millions of dollars in lost economic activity.

Now they're planning budget cuts in the coming months — and years — as they forecast for an economic recession.

The city of Oakland has already laid off several hundred part-time employees at recreational centers and libraries and has implemented a citywide hiring freeze, according to Assistant City Administrator Ed Reiskin. A new memo projects an $80 million budget shortfall over the next 14 months.

In San Francisco, new projections predict the city's deficit will double, growing to between $1.1 and $1.7 billion over the next two fiscal years, according to San Francisco Controller Ben Rosenfield.

Those deficit calculations only reflect anticipated lost revenue from hotel and property transfer taxes due to the shelter-in-place order, said Rosenfield. Expenditures related to the public health crisis — such as acquiring hotel rooms for healthcare workers and homeless people — are not included.

In the South Bay, Santa Clara City Manager Deanna Santana said the city has a one-time $80 million reserve to draw from as emergency response costs continue to rise.

On the Peninsula, San Mateo City Manager Drew Corbett said the city has lost $10 million in sales, hotel and property transfer tax revenue since the county's shelter-in-place order was issued on March 16. Still, he said approximately $88 million in general fund reserves will likely shield the city from immediate budget cuts and government layoffs.

Similarly in Palo Alto, city officials are calculating a $15 to $20 million loss to the city’s general fund in the current fiscal year. City Hall has already trimmed down its staff of about 1,100 employees to 600 essential workers, with roughly 100 of them working reduced hours. Council members are planning to continue paying all city employees to the end of June.

Read the full story from KQED'S Shannon Lin here.