Local officials concerned about loss of revenue due to pandemic

Kelly J. Kaczala

        The coronavirus, or Covid-19, has financially impacted local governments, with some wondering if they will cut their budgets due to a loss of revenue.
        Oregon City Council at its last meeting discussed the prospect of budget cuts and layoffs.
        “I’ve had some conversations with some Street Department workers that are a little concerned that they are short right now and that we’re under an official hiring freeze,” said Councilman Tim Zale. “How do things look for us? They’re a little concerned about furloughs. Are we concerned about that? Or am I being too premature with that?”
         Mayor Mike Seferian said the city is dealing with financial issues one day at a time.
        “We are making attempts to deal with things that come up day to day. We think we have a handle on it. And we will deal with whatever comes our way, whatever we have to do,” he said.
        “We may move people from department to department, if we have to. We want to do everything to keep everyone employed. We have chosen not to hire unless it’s an extreme need because we are going to be faced with some dollar problems in the future.”
        The administration, he added, is trying to stay ahead of engineering work on city projects “in case less money comes in.”
        “We want to have as good a handle on everything and be in as good of shape as we can be. We hope to get employees’ understanding. The workers and managers seem to be on board - most of them. They’re going to have to have some latitude at this time. We’re going to do the best to keep our budget intact. We will deal with issues as they come up. We’re pretty good coming up with a plan and making things work,” said Seferian.
        “I know spending freezes and hiring freezes at this point are very important,” said Zale. “I just didn’t know what our thoughts were, or if we approached that point, and whether we would even lay off people. I think it’s premature for me to even say that. It’s my concern that some of our city employees know that possibly it’s in the future if this continues much longer. I understand we have to stay within our budget. But most of the people I’ve talked to said they like doing the work they do for the city, and they’re afraid they are not going to be able to do them. I told them there are tasks they might not be able to do.”
        Seferian said there will be “some adjustments” regarding the workforce.
        “We believe we’re going to have to ask for their consideration to be flexible. Our ultimate goal is to not only get through this, but get through it successfully and with some dignity. I think we can do that,” said Seferian.
        “We expect that we can achieve our objectives here with some financial responsibility without furloughs or layoffs,” said City Administrator Mike Beazley. “We’ve had a number of retirements that have been announced. We’re looking to not fill vacancies in the near term and assess it as time goes by. We’re doing the math on every scenario just because it’s the responsible course of action. We expect to achieve our objectives with attrition. If things are worse than we expect, then we’ll all talk about it together.”
        Beazley said he has talked with the city’s unions about the matter.
        “We’ve talked with our bargaining units and the workforce just because we’ve had a good relationship. Everyone is worried. When our residents and businesses feel that pain, we feel that same challenge. That’s going to be the challenge for all of us going forward. We know we have a moving target, and we have some surprises every week. We’re supposed to be pretty good at this. We’ll work though it as rationally and as calmly as we can.”
        Northwood City Administrator Bob Anderson said the city has lost about $280,000 in revenue during the period of January, February and March compared to the same period last year due to the pandemic.
        “Our income is down by about 18 percent compared to last year,” said Anderson.
        The city has closed the municipal building to the public. 
        “We have people working from home, which seems to be working out pretty well,” he said. “They come in occasionally. We stagger the days when they come in. There are some things they need to do in the office, like getting the checks out.”
        For now, the city has not made cuts in staffing or salaries.
        “We’re trying to be as understanding and generous as we possibly can. We’re relatively financially healthy for a city our size,” he said. “Obviously, we can’t keep losing 18 percent of last year’s revenue for a long time. That will start to add up quickly. But for right now, we’re kind of holding course. We’re not making big plans to cut anything, particularly staff.”
        Some public projects, such as The Enclave - the proposed development where the former Woodville Mall was located on Woodville Road - and the city’s annual road repair program have not progressed as quickly as the city had planned due to the pandemic, he said. 
        “The Enclave is a big project, particularly the infrastructure, which we might have to slow walk it a little bit more than we want to until we’re certain that things will get back to normal. Our other big expenditure this year is the 2020  road repair budget, which came in at a really good price. We had estimated it at $850,000, but it came in at $660,000. But it was written in such a way that we can change orders and delete parts of it if we find things are getting tight.”
        If the economy deteriorates further this year, Northwood will cut back on expenses.
        “Things could change. We passed our budget at the end of last year, and we’re always able to amend our budget. If things get worse, we can amend the budget by passing legislation, or by not buying a lot of stuff. We might not buy big equipment, such as trucks,” said Anderson.
        He’s hopeful the economy will open up soon.
        “We need to get back to work as soon as we can. If the economy picks up, and people can get back to work, I’m hoping there will be a rebound the last half of the year,” said Anderson.
        Since the city closed the municipal building to the general public on March 19, there haven’t been a lot of inquiries from the public, he said.
        “It’s been pretty quiet since we closed the offices. We have signs asking the public to email us or to call us if they have any questions,” he said. “And if they need to see us, we’ll make arrangements to see them.”
        A hiring freeze was implemented in the City of Toledo earlier this month. In addition, Mayor Wade Kapszukiewicz said at a press conference last week that there would be 326 city employees placed on Temporary Emergency Leave (TEL).
        “We held on as long as we possibly could. We are one of the last cities to move into our new reality,” he said.
        The TEL will be evaluated every 30 days, said Kapszukiewicz.
        He doesn’t expect there to be more employees added to the list of TEL within the 30 days, he said.
        “That’s not going to happen. I think this is where we are for 30 days,” he said.
        Over the next month, the cuts are expected to save about $600,000, he said.
        Much of the deficit, he said, is due to the fact that the city is funded by a payroll income tax.
        “Toledo, and all cities in Ohio  are unique in this country in that we are funded primarily through a payroll income tax. About 71 percent of all revenues that come into the city come in through a payroll income tax. It’s always been that way.” Most other cities across the country are funded by sales or property taxes.
        “When we enter a world where government officials are saying to citizens to stay at home and don’t go to work, being funded by an income tax is not ideal,” he said,
        The required annual reductions in the city’s 2020 budget could range between $25 million to $50 million in the coming several years, he said.
        “When I became mayor, we had a budget deficit. In two years, we turned it into a surplus. Then in the blink of an eye, the world changed. Now we’re right back to having a deficit. Six weeks ago, we had the highest tax collections in the history of the city. Now we know at the very least, we have a $10 million budget deficit to get us through this year. Depending on the various scenarios of how bad this economic situation is, by the end of next year, we’re looking at a $50 million deficit.”


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