FY 2020 Current Budget performance and FY2021 Adopted Budget

As the City's FY2021 budget development process moved through February and early March, significant progress had been made in moving towards a balanced budget.  When City Council was briefed on March 2nd, the deficit between revenues and expenditures was ($1,711,222).  This was based on estimated expense requests of $306,895,622 and total revenues projected to be $305,184,400.  However, as the City and the country moved through the month of March, the effects of the COVID-19 virus grew significantly.  In addition to the major health concerns, recommendations and executive orders from both the federal and state governments had significant impacts on the economy and our own local businesses.  Just for the remainder of FY2020, the City anticipates large decreases in sales tax, transient occupancy tax, and meals tax revenues.  At present, local tax revenues are projected to be $7,840,464 less than the FY2020 adopted budget.  To counter this, City Administration is working with departments on expenditure reductions, holding funding for selected Fleet vehicle replacement, holding funding for capital projects funded with one-time capital funds, and making adjustments to funding for formula partners. The City anticipates continued developments with COVID-19 as we move into FY2021 which could impact service sustainability.  We are re-examining the previous revenue projections for FY2021 and have reduced them accordingly.  On April 6th, City Council was briefed on current year FY2020 expenses and projected revenues, as well as an overview of the FY2021 tax estimate.  At that time, FY2021 total estimated revenue was shown as being reduced from the March 2nd projection of  $305,184,400 down to $299,646,717.  That figure is only $215,717, or .07% greater than the FY2020 adopted revenue budget of  $299,431,000.  The Budget Committee will need to consider a number of strategies as it moves towards a balanced budget proposal.  They include funding only non-discretionary cost increases, foregoing a compensation increase, and funding only the highest base and supplemental priority services and programs.  Base expenditure reductions may be necessary.  In addition, strategies must be developed to respond to changing circumstances pending the ongoing impacts of the pandemic.  That includes preparing a staged contingency plan in the event of lower revenues, monthly revenue monitoring and adjustments, and quarterly monitoring for any necessary adjustments.  The additional planning needed to respond to the impacts of the virus have resulted in changes to the FY2021 budget calendar.  Originally, the recommended budget was to be presented on April 20th and the budget was to be adopted on May 11th.  Those dates have now been revised to May 18th and June 15th, respectively.  The next budget briefing is scheduled for Monday, May 4th.