COVID-19-related financial impacts have collided with the city’s budget.
But existing city service levels are expected to be substantially maintained — at least for now, city officials said prior to the council’s recent approval of the 2020/2021 to 2021/2022 operating budget, which establishes funding for all city-provided services.
“The budget allows the city to substantially maintain existing service levels while operating with a sustainable spending plan for the next several years, even in the face of a difficult recession,” said Christine Andrews, assistant director of finance and information systems.
Andrews called the COVID-19 pandemic and the associated shelter-in-place orders the greatest financial challenge to the city’s general fund budget since the Great Recession.
City officials say the largest immediate COVID-19-related financial impact thus far has been a drop of up to $2.7 million revenue in the 2019/2020 fiscal year budget, with a decrease in combined sales, hotel, gas and business-license taxes, in addition to parks and recreation program fees and development services income playing a role.
In turn, city officials cautiously formed the 2020/2021 to 2021/2022 operating budget, crafting it not to rely excessively on one-time revenues or large subsidies from the city’s budget stabilization fund, comprising past general-fund savings, Andrews said.
City estimates project the city’s revenues and expenditures nearly in balance during the next four years, with annual operating deficits of between $500,000 and $800,000, before dipping into the budget-stabilization fund. That fund is expected to have a $10.4 million balance at the end of the 2023/2024 fiscal year.
In the near term, the city’s general fund — which pays for key services, including police, parks and recreation and streets and transportation — is projected to garner $59.6 million in revenue in fiscal year 2020/2021, with expenditures coming in at $61.2 million.
Preliminary figures suggest that revenues will creep up to $62.5 million in fiscal year 2021/2022, with expenditures inching up to $63.2 million.
A handful of key general-fund reoccurring revenues are projected to decrease in the 2020/2021 fiscal year, including sales tax, development fees, gas taxes, franchise fees and parks and recreation program fees. They are projected to rebound in the 2021/2022 fiscal year, but two other reoccurring revenue sources — property taxes and parks and recreation property taxes — are expected to dip at that time.
City leaders cautioned that the still-evolving nature of the pandemic and its fallout means the municipality’s finances will need to be closely monitored.
“As we move forward into the new fiscal year, updates will be provided to the city council every six months — or more frequently, as needed — to measure the latest economic data against the budget,” City Manager Tim Ogden said.
The immediate pandemic-induced revenue loss did prompt the council to OK pulling back on several planned additions slated for the latest operating budget.
City leaders postponed a move to increase the city’s police department by five police department positions; halted all general fund allocated capital projects, including adding restrooms and pickleball courts to select city parks; and reduced some parks and recreation personnel funding in anticipation of COVID-19-related program reductions.
Additionally, county-approved Measure J funding will be used for street maintenance services, rather than for enhancing the city’s pavement management program.
“These are uncertain times, and being conservative on our part, pulling back where we can, will be vital to how we pull out of this, especially if things are to get worse,” Councilmember Karen Rarey said.
City finance leaders are expected to return to the council in six months, or earlier, to update budget projections.
To view the complete operating budget, visit here