The general fund for the town of Addison will suffer an estimated revenue loss of nearly $1.7 million, or 4.3 percent, for fiscal year 2020 as a result of the financial fallout of the COVID-19 pandemic, according to a presentation by Addison Chief Financial Officer Steven Glickman.
The loss would drop general fund revenues to roughly $37.4 million from an initially budgeted amount of $39.1 million.
The revenue hits will come from a $1 million reduction in sales tax collections and a $700,000 decrease in mixed beverage taxes, according to the general fund analysis.
The city staff is further forecasting a reduction in sales tax in fiscal 2021 in the general fund of between 10 percent and 16 percent. Any impacts from probable property tax decreases are not anticipated to be realized until fiscal 2022, Glickman’s report says.
Staff has identified savings in various line items to help offset the shortfall, including postponing scheduled aesthetic upgrades at the city-owned Athletic Club that are not part of future bond projects. Salary savings and services and supply savings are also on the table, according to the presentation.
The city’s Hotel Fund is being walloped even harder hit by the pandemic. Staff is forecasting a loss of revenue of more than $3.8 million for the fund in fiscal 2020, $3.1 million of which comes from the loss of hotel occupancy tax. Revenue from this fund comes from hotel occupancy tax, proceeds from special events, and Conference and Theatre Centre rentals.
The current calculations assume that Taste Addison will be canceled this year. The event has currently been postponed. Decisions on Kaboom Town! and Oktoberfest have yet to be made.
While staff has been able to identify expenditure reductions of more than $1 million, the revenue loss from the hotel occupancy taxes is insurmountable, Glickman said at an April 14 City Council meeting. This will result in a reduction in the Hotel Fund reserves.
In addition, the Airport Fund is projected to see a decrease of rental income of $509,000, or 11 percent, in fiscal 2020, then a 7 percent to 11 percent reduction for fiscal 2021. Staff also estimates a decrease of fuel flowage fees of $457,440 in fiscal 2020, as well as a 29 percent to 41 percent decrease for fiscal 2021. Fiscal 2020 revenue decreases are being offset by a Texas Department of Transportation land reimbursement of $1.31 million as well as some salary savings.
Staff anticipates the Utility Fund to realize a decrease in water sales of just over $350,000 in fiscal 2020, as well as a 3 percent to 8 percent decrease in fiscal 2021. That shortfall can be offset primarily by funding a sewer line relocation project with $810,000 in project savings from 2014 certificate of obligation bonds rather than using cash, the presentation says.
North Richland Hills, like Addison and most North Texas cities, also faces a significant budget shortfall and said across-the-board pay cuts and other measures are coming because of the coronavirus pandemic.
“This is not where any of us expected to be when we developed our 2020 budget plans, but we are facing a challenge unlike any other we have experienced,” City Manager Mark Hindman wrote in a posting on the city’s website. “We must react in a way that continues critical services and does not place additional burden on the taxpayers.”
The Tarrant County city estimates a revenue shortfall this fiscal year mostly from lower sales tax collections, which account for more than 20 percent of the city’s annual funding. Revenues from permits, fees and other charges for service are already much less than anticipated for the months of March and April.
The city also will be closing non-emergency city operations for three days — May 1, 8 and 15 — with employees losing those days of pay. Public safety operations will not close, but public safety employees will also be scheduled time off in accordance with the pay reduction.
Hindman said the city expects an estimated shortfall of almost $1.5 million, $800,000 of which is sales taxes.
Hindman immediately halted training and travel expenditures and implemented a hiring freeze when city facilities closed to the public on March 13, and part-time employee hours were either eliminated or significantly reduced. Other cost-savings steps include the suspension of library and recreation programs and cancellation of all special events during the pandemic. In addition, city departments are cutting operating budgets to offset revenue reductions.
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