Marysville City Council held its April work session, virtually using a program called Zoom. Above City Manager Terry Emery, top left, council member Deb Groat, top right, Finance Director Brad Lutz, bottom left, and IT Director Aaron Story watch and listen to Monday’s meeting as seen on the computer of other participants. (Journal-Tribune photo by Mac Cordell)
Maryville City Council is bracing for the impact of the Corona Virus on city finances.
At Monday night’s city council work session, which was held virtually with council members and the public able to log in remotely, city administration presented a financial plan for the city.
“This event will be felt for several months, if not years, much like the great recession that came before,” City Finance Director Brad Lutz told council. “While I believe that the impact on our budget will be manageable, it does not mean that there will not be sacrifices to maintain the level of service expected by the citizens.”
City Manager Terry Emery asked residents to “be patient,” because things are changing so quickly.
“Obviously, there is various things we are going to be dealing with over the next several months and we are going to have to go over what COVID-19 is going to mean to our revenue and even to our expenses,” Emery said.
Lutz explained that because information and guidelines are changing so quickly, the plan presented, “may be obsolete quickly after this outline is released, therefore all items below could either never happen, happen sooner or happen later.”
Lutz said he expects city revenues to decrease “due to reductions in business that have reduced staff or closed in response to the stay at home order issued by the Governor.”
He said the reduction is not expected to be significant in April as many of the major employers kept “a vast majority of their workforce” on full pay during the early weeks of the pandemic and some companies, he cited grocery stores, even hired more staff.
Lutz said that as the stay-at-home order continues, it will, “continue to depress income tax collection further.”
“To some degree, I hesitate to make a guess what that might be until we know more,” Lutz said.
He said he would rely on information from Economic Development Director Eric Phillips about business plans as he tried to make predictions moving forward.
City staff members are being asked to begin thinking about projects and expenditures that can be delayed until later in the year or until next year. Administration is also developing a plan “to consider if certain City programs will be active in 2020.”
He said that some departments will need to work around how they are able to pay employees at full or partial levels.
Lutz did say that because of the reduced operations, the city will see some reduction in expensed, citing utilities, supplies and expenses related to events that include public gatherings.
“These expense reductions will not make up for lost revenue, only lessen the impact,” Lutz said.
The finance director said that under normal circumstances there is “a significant decrease” in May revenue for the city. Lutz said with this in mind the city “might see an increase in collections as compared to May of previous years.”
He said that by May the city may need to implement a hiring freeze and departments will need to make decisions about how staff will work and be paid.
He said the city could also request funding from the Federal Emergency Management Agency “to offset Covid-19 related expenses in the police and fire departments.”
Lutz said that by May, officials should start to see a trend for COVID-19 expenditures.
“That will allow for proper forecasting of the impact allowing for a moderate level of accuracy of year end projections,” Lutz said.
He explained that because revenue is collected in arrears, June will really begin to tell the story of lost revenue.
“That may be where we need to have some serious conversations about staffing,” Lutz said.
He said that plans brought forward in April and may will likely need to be finalized and implemented.
Lutz said that based on projections, the impact of Covid-19 should be reaching a conclusion, “which will allow for an evaluation of impacts on the 2021 budget as a result of changes in business operations, closures, or delayed new projects.”
“Beyond that, we don’t have much of a plan,” Lutz said.
He told council the impact of the virus will be felt long after the infections taper off. He said there will be significant delays in some planned projects and cancellations of others. He said some businesses will not reopen.
Lutz said the city will continue to monitor businesses and the city financial condition, “to ensure that the city is ahead of any major developments, positive and negative.”
“It is safe to say that this plan will extend into July and beyond,” Lutz informed council. “The course it takes, however, is still to be determined.”