Mid-May brings the March sales tax revenue report, which indicates growth through the first quarter. As is the case with government entities where sales tax revenue is not delivered directly, but routed through of the State Revenue Department, receipts indicate a delayed effect of consumer buying.
Sales tax receipts in March reflect revenue collected in February when there were not city-wide business shut downs that the city is presently experiencing. By that timeline, the Covid-19 pandemic is still expected to have considerable negative effects on the city’s revenue in the second quarter, but those funds will not be confirmed until later in the year.
On Monday at the workshop, city council received the sunny first quarter financial report knowing that current events of today’s repressed tourism trade will assuredly deliver a gloomy report in the coming months. “As I have said before we have no control over the revenue,” Finance Director Lonnie Clark said. In January through March, revenue was increased by 17 percent, 12 percent, and 11 percent respectively as compared to 2019 for a total of more than $60,000 above the anticipated budget.
Also presented was Clark’s answer to council’s request from the last meeting for a plan to forecast revenue and address expenditures during the pandemic, with the focus to discuss city services and employee retention. Clark delivered three scenarios of reduced revenue by 30 percent, 40 percent, and 50 percent of originally anticipated sales tax.
He called the scenarios a practical budget forecast for the remaining three quarters of the year, but aldermen questioned that practicality. “What does that actually do to the departments?” alderman Harry Meyer asked, seeking an estimation of reduced income to preemptively address the city’s need to reduce expenditures.
Alderman Terry McClung was also left with more questions, saying to Clark, “You are not really presenting any remedy. I’m really not sure where we are… I don’t know what to do.”
Mayor Butch Berry and Clark recommended no specific plan for the financial future of the city, nor an operational strategy to enter into a reduced budget.
“What is your bottom line recommendation?” Meyer asked Clark.
“What are the essential services?” alderman Susan Harman asked Berry. “We are already two months into this and we haven’t done anything.”
“We have to monitor our sales tax coming in because we won’t know for several months,” Berry responded.
In the absence of a strategic pandemic plan, Harman more than once asked department heads if budget cuts were “doable.” She asked the Fire and Police chiefs if they could operate on a reduced budget of 70 percent or even 60 percent, and got varying answers.
On to the meeting
The regular meeting ran late because the workshop ran long, and much was inaudible. What could be gleaned from the public video and a safe assumption of the “Ayes” is that council approved the reapplication from David Hartmann to hold Position 4 on the Parks Commission until May 1, 2025.
Additionally, council approved refinancing Sales and Use Tax capital improvement bonds, pledging one percent sales and use tax, to achieve debt service savings.
Alderman Bob Thomas made a motion to consider at the next meeting reducing the budget by 35 percent as of March 31, which was approved. Mickey Schneider also requested the discussion of the setup of temporary committees.
The next meeting is scheduled for Monday, May 25 which is subject to be rescheduled due to Memorial Day.