Severe potential pandemic-induced impacts on the city’s budget haven’t materialized, officials said during a recent budget update.
The city is projecting a $1.6 million surplus to its two-year (2020/21 and 2021/22) budget, a far cry from a once anticipated budget that projected $4 million drops in revenue per year.
“Following the adoption of the budget, the city has not experienced the magnitude of negative revenue impacts that were initially estimated,” said Christine Andrews, assistant director of finance and information systems.
The optimistic outlook is buoyed by better-than-expected property and sales tax projections and fiscal year 2020/21 park and recreation savings cancelling out an anticipated revenue dip.
The assessed valuation of property, which drives the city’s property taxes, is expected to rise by 5.75% or 2% higher than city projections, in fiscal year 2020/2021, leading to a $595,887 jump in fiscal year property tax revenues, the general fund’s largest revenue source.
Fiscal year 2020/21 sales taxes, the second-largest general fund revenue source, are expected to jump 8% ($657,540) higher than city projections.
Fiscal year 2021/22 property and sales tax projections are also rosy, with property-tax-driven assessed valuation projected to increase 3.5%, as opposed to original estimates of dropping 5%. And 2021/22 sales tax revenue is expected to rise 7% over 2020/21 projected revenue.
“Although there have been significant decreases in sales tax revenue from major business groups, like restaurants, service stations, general consumer goods, and in-person shopping, these reductions have been offset by increased spending online, along with increased activity in grocery stores, construction and home improvement, and autos,” Andrews said. “Legislation requiring online retailers, such as Amazon, to collect and remit sales tax has substantially reduced the negative fiscal impacts resulting from decreased in-person shopping.”
On the expense side, the pandemic and ensuing shelter-in-place regulations saved the city an estimated $699,856 in fiscal year 2020/21 park and recreation costs, primarily part-time staffing, offsetting an expected $480,548 drop in revenue, due to the later than expected return of recreation programs and facility rentals, Andrews said.
The positive outlook is likely to open the door for the return of at least one strategic initiative: the hiring of five additional police officers, shelved to account for expected financial setbacks during the budget’s initial passage in mid-2020.
It’s expected that the additional hires will be formally added to the budget during the council’s mid-term budget update process in June.
Police Chief Tom Hansen said prior to the hires being put on hold that the additional officers will allow the department to break the city into five, as opposed to four, coverage areas — increasing the number of available officers and improving response times.
The council previously shelved $2.5 million for the endeavor, which should be enough to cover one-time costs of establishing the fifth beat, along with two years of personnel costs. Long-term costs would be covered by the general fund and community facilities districts, Andrews said.
If everything moves forward as expected, then the fifth coverage area could be rolled into daily operations in the next fiscal year.
“It has been nearly 15 years since the city added another beat,” said City Councilmember Karen Rarey. “In that time, we have seen our population grow by nearly 20,000 people. I am sure the officers are excited about the addition of a fifth beat, and I can’t wait to get it online.”
City Manager Tim Ogden hinted that further reinstated strategic initiatives could be in store during the council’s mid-term budget update process in June if the city’s finances continue to trend in a positive direction.
Just a small selection of those previously shelved endeavors include amending library hours; implementing an economic development action plan; and increasing Sunset Park operating hours.
“We are going to take (the financial analysis) that we did now and do it again and try to give (the council) financial capacity,” he said.
To view the complete operating budget update report, visit packet page 213 at https://bit.ly/3rG3xoj.