When the FY2021 Budget was prepared, the initial revenue projections were reduced by almost $1 million to provide for lost/reduced revenue as a result of the COVID-19 pandemic. Those reductions were made in the early stages of the pandemic, with minimal information to assist with reliable estimates. In recent budget presentations and Council meetings, staff warned that, if additional reductions became necessary, staff would return to Council with a recommended budget amendment.
With the close of FY2020 and additional information/experience with revenue sources affected by COVID-19, the Finance Department has re-evaluated revenue projections and unfortunately has identified another approximate $1 million in revenue reductions that should be made along with recommended reductions in expenditures to rebalance the FY2021 Budget.
The most significant revenue reduction is in Admissions and Amusement Tax, primarily due to the canceling of UMD athletic events for the fall. The Hotel/Motel Tax, although already significantly reduced in the Proposed FY2021 Budget due to ongoing closures, is being further reduced. Similarly, parking fines and speed camera enforcement revenue is being reduced due to continued reduced traffic. Most of the necessary expenditure reductions are proposed from ongoing capital projects and can be deferred to future years with minimal impact on the ongoing operations of the City.
The following capital projects will be impacted by the proposed changes: (a) Pavement Management Plan – $392,000 – 50% reduction/defer (b) Vehicle Replacement – $300,000 – 60% reduction/defer (c) Facilities Capital Reserve $25,000 Cut (d) Public Works Facilities Improvements – $100,000 – Defer.
However, other operating expenditure reductions are available due to COVID-19 effects, such as reduced or eliminated travel related to conferences that have become virtual and canceled special events.
The budget amendment will also provide for the estimated costs ($13,000) of a special election for the District 2 City Council seat which will be vacated due to the resignation of Councilmember Brennan.