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Sentinel staff report–
The effects of mandatory shutdowns to slow the spread of the coronavirus have hit many businesses hard, and the toll on state and local governments is now beginning to surface as well.
Gov. Gavin Newsom announced this month that the state is now facing a $54.3 billion budget deficit, resulting in an updated budget proposal that slashes school funding, cuts state worker pay by 10 percent and could bring back furloughs that were last seen during the Great Recession.
So how will this affect Citrus Heights?
City spokeswoman Nichole Baxter said Thursday that a final number on expected budget shortfalls is yet to be determined, but city staff are “working diligently on the forecasting.” She said budget updates and amendments are currently listed on the agenda for the City Council’s June 11 meeting.
Some preliminary projections have been released: $3 million in reduced sales tax revenue through the end of the next fiscal year, ending June 30, 2021, along with $40,000 in revenue loss at the Citrus Heights Community Center, where hundreds of rentals for events are booked each year.
“City staff have been working hard to adjust expenditures to offset the sudden reduction in revenue caused by the effects of COVID-19 and associated public health orders,” the city’s assistant city manager, Ronda Rivera, said Monday in an email response to an inquiry from The Sentinel. “Our team has spent hundreds of hours forecasting the budget impacts of lower sales tax revenue, and less income from fees for services provided by city staff.”
“While immediate impact could be somewhat mitigated through a reduction in expenditures, it would mean a reduction in services,” said Rivera, responding to a question about what actions the city has taken so far to address anticipated budget reductions. “The City prioritizes fiscal responsibility and already runs on a very lean budget. If we opt to further reduce expenditures, the only category for reduction is in personnel costs.”
Rivera said a decision has already been made to not fill existing vacant positions at City Hall, aside from several openings within the police department that she said are “critical for public safety services.”
Citrus Heights relies heavily on sales tax, as it makes up about 40% of the city’s general fund. Reductions is sales tax revenue can affect city services funded through the general fund, which includes police, facilities, communications, housing, planning, building, public works, and other departments.
Vice Mayor Steve Miller told The Sentinel last week that he and other council members have been kept up-to-date on budget impacts by city staff, noting that sales tax revenue is down, “but not as bad as it could be.”
Miller said the only upside is, “at least we don’t have as far to fall,” noting that other cities are losing out on revenues like occupancy taxes from now-vacant large hotels, which Citrus Heights never had in the first place.
Councilman Bret Daniels described budget numbers he’d been briefed on as “concerning but not overwhelming.”
“It’s unfortunate that we do not have the funds in our General Fund Reserve that were designed for the rainy day scenario,” said Daniels, who was a vocal opponent of the city spending most of its reserves to build a new City Hall five years ago. “The rainy day has arrived. But hey, at least we have a new city hall…”
Asked whether the city’s $12 million line of credit will be used to mitigate projected impacts to the budget, Rivera said the city is “not anticipating” using the line of credit, or tapping into the city’s general fund reserves, which is currently around $5.4 million. She said the city’s credit balance is currently around $3.3 million.
Federal and state assistance
Katherine Cooley, assistant to the city manager, said local governments of cities under 500,000 population in size have so far been left out of federal coronavirus-related stimulus packages, but staff are hoping pending legislation will provide $375 billion in relief for cities and counties.
Noting the State of California’s massive projected budget shortfall, she said it is unclear what relief, “if any,” will be available in funding from the state.
Some federal emergency funding has already been received by Citrus Heights, totaling nearly half-a-million dollars.
City Economic Development Manager Meghan Huber said funding has included an additional $376,000 Community Development Block Grant, as part of the federal CARES act. The city also received $85,000 through a Coronavirus Emergency Supplemental Funding law enforcement grant.
Additionally, Huber said the city’s ongoing state of emergency, which was declared in mid-March and renewed this month in response to the coronavirus threat, allows the city to qualify for some additional outside funding. She said the city will be able to receive reimbursement from both state and federal relief assistance programs, but specific amounts “are yet to be determined.”
Asked whether a tax measure is being considered to boost city funding, Rivera said, “There has been no decision at this time to move forward with any measure,” but noted the city is continuing to seek outside funding, “including potential options for enhancing local revenue” to maintain priority city services.
“We know that there were major community priorities before COVID-19 that remain top-of-the-list, including maintaining public safety, repairing roadways, supporting local businesses, and continuing to address homelessness,” said Rivera. “We need to balance those important concerns with our local recovery efforts.”
Miller, who served on the City Council through the Great Recession a decade ago, said life in the post-coronavirus economy won’t be easy.
“It’s gonna be tough and we’re gonna have some tough choices.”
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