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Virus saps city coffers

Staff Writer | May 20, 2020 1:00 AM

COVID-19 could steal $1 to 2 million from Cd’A general fund

A glimpse at the city of Coeur d’Alene’s slice of revenue in the age of the coronavirus was a sobering forecast to city leaders Tuesday night.

In a presentation to City Council, city administrator Troy Tymesen gave grim projections for potential lost revenue in the year to come, speculating Coeur d’Alene could lose between $1 million and $2 million in five key general fund drivers.

“We are in the midst of the budget [process] with the city of Coeur d’Alene,” Tymesen said. “… COVID-19 has changed our world.”

As the pandemic that has infected almost 5 million people worldwide prompted a slowdown of the Idaho economy — a slowdown deepened by Gov. Brad Little’s March 25 stay-home order that stretched through April — fewer people spent goods and services that contributed to the tax base, applied for building permits or conducted the typical business that fuels the economy. This resulted in fewer taxes being divided among Idaho’s municipalities, including Coeur d’Alene.

“This has been an amazing economic change in the fact that our economy was pretty much flourishing at about 100 percent,” Tymesen said. “We had unemployment at 3 percent or less; we could have unemployment in the neighborhood of 20 to 25 percent, as this has changed our world.”

The city’s budget sits at approximately $97 million annually. Of that, self-supporting government revenue — also known as enterprise funds — comprises $44 million, or about 45 percent of the budget. Most of the remainder comes from the city’s general fund, and while revenue from property taxes that feeds the general fund will likely not be impacted this year by COVID-19, that remainder is funded by revenue streams like building permits, highway district funds, liquor taxes, highway user fees and — most notably — state revenue sharing. These revenue streams, Tymesen said, is where COVID will likely make its budgetary impact in the year to come.

Tymesen gave three projections to the council Tuesday night: a conservative 10-percent decline to those five revenue streams, a worst-case 20-percent decline and a down-the-middle, 15-percent decline. The conservative figure estimates a loss of $1,019,711, while the 20-percent decline takes $2,039,422 out of the budget. Tymesen he expects something closer to the conservative estimate or the moderate 15-percent decline of $1,529,567.

A decline in revenue sharing takes up the lion’s share of all three figures, totaling anywhere between $415,221 to $830,442 in projected losses to those revenue sources.

The numbers come in the middle of City Hall’s budget process. Tymesen said he will likely propose cuts in expenses in the months to come to counteract the impact COVID-19 is leaving behind.

Tymesen said he based his projections in part on projected quarterly revenue decreases over the past few months, as well as predictions from economists, some of whom forecast the world economy will contract as much as 6 percent in the year to come. The bulk of that contraction stems from COVID-19 striking in the heart of the fiscal second quarter, where the U.S. Gross Domestic Product is predicted to contract anywhere from 30 percent to 41.5 percent.

“As we did during the Great Recession,” Tymesen recalled, “we’re looking to capital items to go away, limit services and supplies, and do our best not to (add) any … personnel.”

The financial plan Tymesen and staff are putting together will likely include income reductions and a hiring slowdown at City Hall, if not an a hiring freeze. The plan also could include moving money from the city’s savings, though Tymesen said he wasn’t yet willing to make such a request.

“At this time, I would call it a rainy day,” Tymesen hypothesized, “and we might have to look at that fund to balance out our financial plan … It’s looking into that crystal ball and setting up what you’ve already been thinking about for fiscal year 2021.”

One bright-ish outlook in the otherwise-gloomy projections: The 10-, 15-, and 20-percent across-the-board reductions slashed all five revenue streams in equal proportions, but in reality, the liquor tax revenue is not projected to decrease. Idahoans, Councilmember Dan English pointed out, are drinking.

“From what I’ve read recently from the state data,” English pointed out, “for a lot of reasons, they expect that to be significantly up or … hold their own.”

Still, Tymesen added these projections did not include enterprise fund losses, which include revenue from sources like parking fees, a number that was cut in half after the stay-home order kept Idahoans sheltering in place.

“Wastewater [revenue] is down,” Tymesen cited, “because businesses have not been open.”

The drill-down of those projected losses will not be Tymesen’s last. He said he will update Council again at the June 8 meeting, and that City Hall will have additional figures as next year’s budget gets shored up.