Options to cut budgets for city, county on table

Officials mindful of impact as pandemic affects revenue

Government officials in Jefferson County and Pine Bluff said they face the specter of furloughs, cuts in services and long-term struggles as a result of the financial fallout of covid-19.

In two separate meetings Thursday, officials discussed the long-term financial effect of the epidemic, saying the economic reverberations could last well into 2021.

The city of Pine Bluff budget for 2020 is $53.4 million and the Jefferson County 2020 budget is $25.5 million. Each needs to cut millions from those budgets to survive, officials say.

The consequences could be significant. Reductions in staffing levels of public employees could have a detrimental impact on many levels, including education, sanitation, public safety and health.

All of this comes at a time when elected officials all over the country are trying to figure out how to manage a financial crisis that has no precedent in recent memory. According to an estimate from the National League of Cities, between 300,000 and 1 million public-sector workers across the nation could soon be out of a job or sent home without pay.

In the city, Finance Director Steve Miller laid out the forecast combined from a report by the Arkansas Municipal League and his own examination of city finances.

For county elected officials, Jefferson County Judge Gerald Robinson presented a forecast of declining revenue and urged elected officials to consider a 30% across-theboard furlough of the county’s workforce to delay or avoid permanent layoffs.

Both the county and the city employ about 425 people each, officials said.

Even the closure of the city’s convention center was on the table as part of a package of possible cost-saving measures presented to officials regarding the city’s financial situation as the economy continues to decline because of restrictions due to the covid-19 pandemic. An immediate closure is unlikely, however, because the convention center is the only facility in the city large enough to accommodate meetings and court proceedings that may be subject to social distancing requirements for a number of months, even after some of the more stringent restrictions are lifted.

Council Member Glen Brown Jr., also a member of the Advertising and Promotion Commission, which supplies about $1.3 million annually of the convention center’s $1.6 million budget, said the commission recently approved a 15% across-theboard cut to the convention center, about $200,000, and to the city’s promotions budget in an effort to cope with a sharp decline in hotel and restaurant sales tax receipts.

For city officials, the financial outlook followed a report issued by the Arkansas Municipal League this week that projects an average revenue shortfall to cities of 26.5% for the period of March 1 through Dec. 31. Miller briefed Pine Bluff Mayor Shirley Washington and members of the city council on the report and provided his own projections for the city budget on Thursday, advising that the city’s $4.2 million in reserves could be exhausted by the end of 2020 at the current rate of spending.

Miller said the city can expect to take in significantly less revenue than anticipated due to a variety of reasons from the covid-19 crisis, which he said range from declines in retail sales, court fine revenue, utility franchise fee revenue, and other sources, virtually all of which have been negatively impacted.

Also, Miller noted, in March the General Assembly cut state turnback revenue to cities and counties by 15% in response to anticipated revenue shortfalls. That cut, he said, will take effect on July 1, carving roughly a half-million dollars out of the city’s street department budget.

At current projections and expenditures, Miller said, the city’s reserve fund is projected to be depleted to about $100,000 by the end of the year. That possibility, he said, could leave the city without any cushion in the event of a resurgence of the virus in the fall, a possibility that many public health experts have warned about.

“We are at risk,” he said. “If the virus comes back hard in the fourth quarter, we’re going to have another loss in 2021, and not really have the reserve anymore to help with that.”

Even if there is no significant resurgence of the virus, Miller said, forecasts indicate that the effects of the economic injury will last well into next year.

“Everything I’ve read indicates that it’s going to be a protracted recovery,” he said. “What I’ve heard is that 50% of small businesses in America can’t last two weeks without getting revenue and a lot of them were waiting on the paycheck protection program and they didn’t ever get it. Well, it’s been a lot more than two weeks and some businesses have gone out of business nationwide, and here as well.”

Casino revenue from Saracen Casino Annex and Saracen Casino Resort in Pine Bluff, once it is completed in June, are no longer on the table for most of the rest of the year. Casinos were ordered to close in March and it is not known when they will be cleared to resume operations.

That alone has resulted in the curtailment of about $110,000 monthly in gaming receipt revenue to the city, about $90,000 of which it had earmarked to pay for raises for public safety employees, and about $40,000 to $50,000 a month to Jefferson County, which was helping to build up its reserve fund.

Both the city and county are trying to find ways to cut expenses and preserve their cash reserves for as long as possible.

“Cash is king right now, so I guess the name of the game is to hang on to as much cash as we can to protect ourselves from the effects of covid-19,” Miller said.

Ultimately, city officials directed Miller and Washington to develop a plan for employee furloughs that includes numbers and dollar figures, to shift a planned police car purchase from a nearly $500,000 lump sum payment to a five-year loan, to eliminate a half-dozen positions in the city that were funded in the 2020 budget but never filled, and to order the curtailment of any construction projects not already underway.

Miller pointed out that the cost of shutting down ongoing construction projects, such as the renovation of the city’s Merrill Community Center, would result in even higher costs once construction were to resume.

Because the City Council agenda has already been set for its regular meeting on Monday, the earliest the council can act is May 18.

In the county, Robinson asked elected officials to consider a 30% across-theboard furlough of employees, which, he said, would amount to about 125 people.

He found little enthusiasm for the plan.