The Deficit Of Palm Springs Due To Coronaviral Pandemic is $76 Million

In the midst of the coronavirus pandemic and related shutdowns, Palm Springs anticipates a budget deficit of $76.4 million between the fiscal year ending in June and the one beginning in July, according to a Monday staff report outlining the city’s strong financial outlook reality.

Over the past 15 years, tourism revenue has helped build services in the town of Palm Springs, with hotel bed and sales tax revenue paying for many of the amenities the town provides.

But the financial survival of the city and the viability of facilities such as swimming pool, library, and robust public safety are now closely related to how quickly the economy will recover. There are not enough unrestricted reserves in the town to cover the anticipated shortfall.

Palm Springs

Monday’s report was published in anticipation of Thursday’s City Council meeting, where officials will review the figures and discuss their options. The overall budget of the city in 2019-2020 was $121 million, so for this fiscal year alone, the $29 million deficit anticipated amounts to a 24 percent shortfall.

The revenue from hotel taxes in the city has more than tripled in the years after the last recession, from $12 million in 2009 to $37 million expected in this fiscal year. This development has sparked changes in community services — like the Coachella Valley ‘s highest level of police officers among towns, and the opening of a fifth fire station. The virus has effectively halted the era of development, and according to the report, staff reductions are anticipated in both the police and fire departments.

Palm Springs

The study cautions that the estimates can differ. But given the uncertainty of when the state and local economies will be able to restart, which is likely to be in phases over time, the path towards full recovery to the City’s pre-COVID revenue rates would possibly take months if not years, the report states.

Hence, under these unprecedented circumstances, Palm Springs’ capacity to provide higher rates of services associated with a “full-service city” model is not sustainable, the report cautioned.

Phillip David Russell
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