Costa Mesa to lose at least $10 million from coronavirus impacts, city says

As people clutch their pocketbooks tighter, Costa Mesa is feeling the economic effects. The city could see a loss of at least $10 million — and up to $18.5 million or greater — through the end of June, according to city staff projections.

The Costa Mesa City Council will meet Tuesday to consider a host of options to accommodate the projected economic impacts of the coronavirus on the city’s $174-million budget. A loss of revenue from local sales, hotel and business license taxes has stunted the city’s coffers. Broken down, the numbers are grim.

In an optimistic projection, sales taxes would decline by at least 50%, meaning a nearly $5-million shortfall in the city’s general fund. The hotel tax, officially deemed the transient occupancy tax, would bring the general fund $2.6 million under budget. Revenue from other items, such as parking citations, room rentals, park program fees and business license taxes, could decline by $2.5 million, according to a city staff report.

A more pessimistic economic projection could mean a shortfall of $18.5 million — just until the fiscal year’s end June 30.

“This scenario assumes a potential decrease from budget estimates in sales tax of $10.6 million, TOT at $3.5 million and $4.4 million in miscellaneous fees,” the staff report states.

The general fund’s reserve balance is $53.3 million, according to the report.

The council will consider an array of options, such as eliminating nonessential expenses, limiting hiring and cutting travel, conferences and training budgets. The city also could cut or defer until mid-2021 such capital improvement projects as the city’s stormwater drain system, City Hall’s elevators and citywide street improvements.

In another issue to be addressed Tuesday, the council will vote on whether to extend the lease of the temporary homeless shelter at Lighthouse Church of the Nazarene until December, for a total cost of $117,633. The lease expired Tuesday.

Tuesday’s council meeting will take place at 6 p.m. Members of the public are invited to watch the livestream at YouTube.com/CostaMesaTV or tune in to Spectrum Channel 3 or AT&T U-verse Channel 99.

To comment on an agenda item, email it to cityclerk@costamesaca.gov. Comments will be accepted continuously during the meeting and will be read into the record up to the three-minute time limit. Any further portion of a comment not read aloud will still be included in the record. Members of the public also may leave a comment via voice message at (714) 754-5327 by 5 p.m. Tuesday.

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