In the wake of the United States Treasury Department awarding the County of Riverside $431 million as part of the CARES Act — and facing a potential loss of as much as $78 million in tax revenue due to impacts from COVID-19, the Palm Springs City Council has sent a letter seeking significant federal assistance to the highest officials in Washington D.C.
The letter, addressed to President Donald Trump, Steven Mnuchin, Secretary of the Treasury, U.S. Sen. Mitch McConnell, Majority Leader of the United States Senate, U.S. Sen. Charles Schumer, Minority Leader of the United States Senate, U.S. Rep. Nancy Pelosi, Speaker of the House of Representatives, U.S. Rep. Kevin McCarthy, Minority Leader of the House of Representatives and U.S. Rep. Raul Ruiz, highlights how on March 19, 2020, the Palm Springs economy came to a sudden halt due to the COVID-19 pandemic – closing nearly all the City’s large and small hotels, restaurants and shops. As a result, Palm Springs was one of the first cities to declare a fiscal emergency and absent financial assistance from the State or Federal government, is now faced with substantially reducing or eliminating vital core services.
The City relies on tourism to generate transient occupancy tax (TOT) and sales tax revenue that sustains its general operations for residents and the estimated 5,000.000 tourists that visit on an annual basis. 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. The City’s 2019-20 fiscal year budget was based on traditional annual growth in TOT/ sales tax revenue and was adopted with total General Fund revenue of $121.2 million, of which just TOT and sales tax generate nearly 50% of total revenue.
The loss of revenue to the City is estimated as follows:
- $28 million in Fiscal Year 2019/20 (ending June 30, 2020)
- $50 million in Fiscal Year 2020/21 (July 1, 2020/June 30, 2021)
The letter from Council states, “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. 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 for Palm Springs, which relies on its national and international brand-name status as a tourist destination, the effects are made even worse. For example, during peak season in April, there would normally be 70-80 flights daily into Palm Springs International Airport. However, this April there were only 15-20 flights daily, each with just a few passengers traveling for essential purposes. In addition, the Council requests in the letter that federal officials carefully consider any proposal based on population alone because although the City has a permanent population of just under 50,000 – that number swells to double during peak winter season when visitors come from colder climates to enjoy the year-round Coachella Valley sunshine. Annually over 5 million tourists stay overnight in Greater Palm Springs.
“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 City Council states in the letter. “As such, we respectfully ask that funding be provided to cities based on the actual impact of COVID-19 to their revenue, rather than by population.”