Palm Springs Projects $78 Million In Lost Tax Revenue: COVID-19

PALM SPRINGS, CA — The city of Palm Springs is seeking significant assistance from the federal government amid a revenue loss that could tally $78 million, the city said Tuesday.

In a May 11, 2020 letter addressed to President Donald Trump, Treasury Secretary Steven Mnuchin, Sen. Mitch McConnell, Sen. Charles Schumer, Rep. Nancy Pelosi, Rep. Kevin McCarthy, and Rep. Raul Ruiz, the Palm Springs City Council laid out how on March 19 its economy came to a sudden halt. The date marks the timing of Gov. Gavin Newsom's stay-home order amid the COVID-19 pandemic.

Early on in the crisis, the city declared a fiscal emergency. Without aid from the state or federal government, the city council said it's now tasked with substantially reducing or eliminating vital core services.

"The city relies on tourism to generate transient occupancy tax and sales tax revenue that
sustains its general operations for residents and the estimated 5,000,000 tourists that visit on an
annual basis," the council members said in the letter. "Unlike most cities of its size, Palm Springs is a full-service city complete with police and fire services, airport, convention center and Bureau of Tourism, golf course, and wastewater utility."

Transient occupancy tax/sales tax revenues make up nearly 50% of the city of Palm Springs' general fund revenue. The city projects $28 million in lost revenues during the current fiscal year that ends June 30. In the 2020/21 fiscal year that begins July 1, the city projects revenue losses of $50 million.

“These losses will directly impact actual day-to-day, essential services (not pension related costs) in police, fire, paramedics, 911 dispatch, housing, homelessness, library, community centers and youth programs," the letter to the feds reads. "Unlike the Great Recession, which gradually built up in severity and occurred over 18 months, the COVID-19 pandemic has caused such a significant swift and sustained stop to the entire economy that the fiscal effects are staggering.”

The letter goes on to outline that Palm Springs relies on its national and international
"brand-name status" as a tourist destination, so the shutdown's effects are made even worse.

During the desert's peak season in April, there would normally be 70-80 flights daily into Palm Springs International Airport, according to the city. However, this April there were only 15-20 flights daily, each with just a few passengers traveling for essential purposes, the city said.

“Palm Springs is not seeking financial support for pension or other obligations. Rather, we are only seeking financial support to replace revenue that has been lost as a direct result from the impacts of COVID-19,” the letter states.

The population in Palm Springs is about 50,000 people, but that number swells during the tourist season — a point made in the letter.

" ... we respectfully ask that funding be provided to cities based on the actual impact of COVID-19 to their revenue, rather than by population."