The Los Angeles County officials are going to release the 2008-09 proposed budget today. The forecast is bleak, largely because of a drop in property and sales tax revenues and a $200 million deficit in the health department, Rick Orlov and Troy Anderson report.
Ross DeVol, director of regional economics at the Milken Institute, said most local governments’ financial problems are related to the sharp downturn in the housing market.
“The housing market will be more severe in California than elsewhere because we had the largest run-up with speculators and others,” DeVol said. “We have a lot of foreclosures and it’s going to depress prices and will take some time to recover, perhaps not until the first part of 2009.
“It affects the local sales tax because people are not buying furniture or appliances or home-related products. They don’t have the discretionary income to buy as much, and you see car sales down as well. All these big-ticket items affect the revenue stream.”