During the April 14 City Council meeting, the City of Concord reported that without help from the State of California or Federal Government, they see significant fiscal challenges in the future.
According to staffs best estimates at the time of the report, they presented figures to the City Council saying the longer COVID-19 continues, the budget will get worse and could take up to a decade to recover.
Karen Reid, Director of Finance, reported the General Fund is anticipated to fall $7.1 to $11.4 million short of the adopted budget for this year’s fiscal year and $13.1 to $19.1 million short for Fiscal Year 2020-21. Measure Q revenues are anticipated to be $1.0-$2.8 million short of projections in FY 2019-20 and $1.6 to $4.2 million short in FY 2020-21.
When compared to the Great Recession, the difference with COVID-19 is the revenue shortfall will occur immediately, whereas the great recession occurred over several years.
“We are expecting between 7% to 13% reduction from what our adopted budget for this year and next year 13% to 21%,” stated Reid who stated they provided ranges based on two scenarios.
“We have started our fiscal planning now and our showing our fiscal revenues will be significantly impacted and we are trying to get ahead as much as possible by implementing fiscal stability efforts now,” said Reid. “This event appears it will last between six to nine months with gradual recovery starting next fiscal year and continuing on to future years.”
Providing context, Reid further highlighted how some economist predict that these impacts will be deeper and last longer than the great recession and for Concord that recovery took almost 10-years.
She encouraged the council to take action now to preserve fiscal stability while still being able to provide services.
Some of the assumptions in their figures include that there will be gradual openings of nonessential services over the next year along with a ban of public gatherings of any size through next year, along with no support or relief from the federal or state governments.
Reid warned the council that without any additional action, it will drop their reserves under 17% at the end of Fiscal Year 2020-21 and will run out of reserves by next year to 0%. She further highlighted what cuts needed to be made to ensure a reserve:
General Fund Reserves at end of FY 2020-21 Under Scenario A:
- 30% reserve requires $19 million in reductions
- 20% reserve requires $11.5 million in reductions
- 17% reserve requires $9 million in reductions
General Fund Reserves at end of FY 2020-21 Under Scenario B:
- 22% reserve requires $25 million in reductions
- 20% reserve requires $23.5 million in reductions
- 17% reserve requires $21.5 million in reductions
Reid warned the council not taking action to reduce costs is not an option as next year they could have a fund balance of just 0% to 8% by next year.
Actions Currently in Process
The City Council has recommended its members volunteer a 10% salary reduction, with no end date. Estimated savings are $2,200 in FY 2019-20 and $10,570 in FY 2020-21.
The City Manager, City Attorney, Chief of Police and Executive Management Team have voluntarily offered to accept a 9% salary reduction through furloughs and suspension of certain benefits and to postpone the 3% scheduled salary increase a year. It is anticipated that furloughs and benefit reductions will extend until the City budget stabilizes. Estimated savings are $45,000 in FY 2019-20 and $323,000 in FY 2020-21.
It is proposed that similar pay reductions be imposed on unrepresented Managers and Confidentials. Estimated savings are $160,000 in FY 2019-20 and $1.0 million in FY 2020-21.
The budget amendments will come back before the council at the end of May or early June.
For the full meeting and agenda: click here
