East Contra Costa Cities Preparing Budget Cuts Due to COVID-19 Fiscal Impacts

With an anticipated loss of revenue which will result in a budget gap in the upcoming year, local cities in Contra Costa County are already planning for a potential hit to their projected budgets—the question is just how big the COVID-19 shutdown will impact future budgets.

The loss of revenue will come from an anticipated reduction in sales tax, user fees, development fees, and possibly property tax revenues just to name a few.

With 16 million in new unemployment claims over the past three weeks, it will hit the economy as there have been a series of layoffs, furloughs for not only local business, but also local municipalities.   What is also not clear is just how many business that are closed will never reopen.

Local governments across the country have already placed a hiring freeze and many positions that are vacant will stay that way for the time being which is placing a savings on city budgets.

The cities of Antioch, Brentwood, Oakley and Pittsburg all confirmed last week they are already preparing for budget cuts and a change in business operations going forward. But none of them could predict just how much revenue could be lost and are planning for the unknown at this point in time.

In fact, the City of Antioch is preparing two budgets while the City of Pittsburg is preparing three versions of their budget. Both the City of Brentwood and City of Oakley are still preparing their budgets as of last week.

Here is an overview of where each city stands in this process”

City of Antioch

Antioch Mayor Sean Wright said the city is basically preparing two versions of its budget with one being a “normal” budget, and the other with items they may have to cut in some form or another.

Antioch City Manager Ron Bernal said they were monitoring their fiscal position based on the economics of COVID-19.

“Like the rest of the world, the City of Antioch is in the middle of focusing all of its efforts on protecting the community from both the public health and economic impacts of COVID-19. At the moment, we are closely monitoring our fiscal position, and are developing plans for various economic scenarios,” said Bernal.

According to their City Council Agenda for April 14, the first budget is estimated with sales tax impacts from COVID-19 while a second version is based on a full recession scenario with a much longer and more significant impact to future sales tax revenues.

For Fiscal Year 2020, they are seeing a $118,481 increase in sales tax (including COVID-19 impacts) along with $275l projected revenue from cannabis fees and overall, the mid-year budget resulted in a net savings to the General Fund of $663,364.

By Fiscal Year 2021, anticipating a $502,700 decrease in sales tax due to COVID-19. However, projecting $600k revenue from Cannabis fees from the two dispensaries.  Meanwhile, the city will review a series of expenditures from new positions and anticipated work—which the council will review.

• Wayfinding – $250k
• Utility Box artwork – $88k
• Murals – $70k
• Homeless services – $367.3k
• Economic Development Programs – $367k
• Youth Network Services Manager – $200k
• Youth Recreation Increase – $350k & $750k
• Median Improvements – $100k
• Assistant City manager – $408k
• Public Information Officer/Communications Officer – $180k
• Risk Manager – $196k
• Computer Technician- $115k
• Unhoused Resident Coordinator – $70k
• For full list, view the agenda.

In version two, Antioch is anticipating a sales tax drop of $2.2 million, a $500k reduction in business license taxes, and no increase in property tax base. Meanwhile, recreation programs and rentals will not resume until July and the water park will remain closed through all of next fiscal year resulting in increased subsidy of $433,725 for lost revenue.

Antioch is still collecting Measure W sales tax. Meanwhile, no word yet on whether they will suspend Measure O after the city council adopted an urgency ordinance enacting a temporary moratorium on evictions for residential and commercial tenants financially impacted by the COVID-19 pandemic. According to the ordinance, tenants are held liable for any unpaid rent and shall receive a ninety (90) day grace period per month of arrears after expiration or other termination of the term of the ordinance during which to repay any monies due for failure to pay rent or utilities.

City of Brentwood

The City of Brentwood has already instituted a hiring and non-essential freeze, no longer paying certain part-time employees, and culling through programs and projects now in anticipation of recommending cuts to the city council during their formal budget process.

They have been reviewing their budget projects for the past several weeks and have been holding meetings to assess their response to the anticipated recession.

City Manager Tim Odgen stated their sales tax consultants provided them with the latest projections.

“The sales tax figures for the next 6 months are estimated to be down in the auto dealerships, construction, fuel & service stations, retail and restaurants industries.  The city’s budget presentation in May will reflect these estimates,” said Ogden.

Meanwhile, Mayor Bob Taylor explained that as soon as the State began issuing updates and stay-at-home directors, the City Staff began looking at its budget and preparing scenarios that would be provided later this spring to the city council to determine what actions may need to be taken not only this fiscal year, but for potential the next several years depending on how COVID-19 plays out.

City of Oakley

The City of Oakley began in late February and early March a strict social distancing at city hall and eliminated all in-person meetings which was before the order to do so came in on march 17—since then, have since pushed out all health information to the public.

According to the City Manager Bryan Montgomery, the police department took precautions first, then by March 17, they worked to determine what essential services could be provided by the least number of staff possible where they developed work plans and capacity for much of the staff to work remotely and closed all city facilities. By March 31, they issued a more strict order where any employee not providing “essential” services as defined by the County Health Order, or not working remotely is utilizing leave accruals.

Montgomery says the crisis will impact all residents and business in some way noting the city’s revenues will also be impacted, including reduction is sales tax revenues, user fees, development fee revenue, State-transferred roadway funds, and some eventual impact on property tax revenues.

While they are still reviewing estimates, he anticipates it will be hundreds of thousands of dollars what won’t come in this current fiscal year that ends on June 30^th and they will likely see a continued impact on next fiscal year, depending on how the crisis plays out.

“We really appreciate that the vast majority of Oakley residents are taking this all very seriously. We have seen good behavior at grocery stores and a willingness to reach out and help neighbors – all so true to what Oakley is known for,” said Montgomery. “I believe we are all learning  a lot through this difficult experience and I hope we all take note and prepare ourselves and our households for what may be other challenges in the years ahead.  I encourage my fellow Oakley residents to make emergency preparedness plans and other preparations as a matter of practice, even after this current crisis passes. We’ll get through this one and can be stronger for whatever may come in the future.”

City of Pittsburg

Since enacting the local emergency which closed public facilities and cancelled events, only Essential services, including law enforcement, public works, water treatment plant, island energy, and the housing authority have continued.  Recently, the City Council adopted a residential and commercial eviction moratorium on Monday, April 6th.

The City has reduced hours for seasonal employees, delayed any non-essential hiring and spending, and canceled events/classes/activities.

City Manager Garrett Evans says the City is preparing for losses in sales tax, transient occupancy tax, and other revenue sources.  City staff has drafted different revenue reduction scenarios ranging from 10%, 20%, and 30%.

“Unfortunately, right now we do not know the extent or length of the stay at home order.  City staff will work with the Finance Subcommittee and the whole City Council in budget workshop sessions through this process.  The Finance Subcommittee will recommend the extent of the revenue reduction City staff will bring forward in its 2020-2021 budget,” said Evans. “This pandemic will have a significant impact on the East County economy.  We have had several downturns in my 23 years with Pittsburg, we will get through it, and we will see more and better growth on the other side.”

Other Tidbits:

• Bay Area Rapid Transit (BART) announced that starting Wednesday, April 8, Monday-Friday service will run every 30 minutes until further notice.Ridership data shows social distancing remains possible on all trains with this change.  Effectively, every other train is being cancelled Monday-Friday. More info
• East Bay Regional Park District announced park area closures to address overcrowding and public safety. Additionally, park picnic areas are closed, and all group gatherings prohibited. More info
• Tri Delta Transit announced Friday that all fares on buses will be free and in an effect to ensure social distancing, boarding buses will be through the rear door unless they require a wheelchair ramp. More info