Being flexible
Council approves 2020-2021 budget but will revisit in October
During a special City Council meeting on Tuesday night, the Porterville City Council unanimously approved the adoption of the city budget for the 2020-2021 fiscal year (FY), but will have to revisit the budget in October to include any modifications that may need to be made due to the impacts of the COVID-19 pandemic on city funds.
City manager John Lollis began by saying that the city was on a good track, but the COVID-19 pandemic has set back the city in regards to their budgeting process. Lollis said that going forward, in order to prepare a full budget, the city will have to look at the net effects from the COVID orders, such as the stay-at-home order, and how they fully impacted the cities revenue from local taxes.
“I think it’s going to have to be a consistent conversation,” said Lollis. “I think it’s going to require a lot of ingenuity and rethinking how things are done, and being flexible and being able to pivot as you see circumstances arise.”
Greatest impacts that are estimated to effect the city the most is the decrease in collected sales and use taxes. It is estimated that the city will be impacted during this new FY between ten and 20 percent, with the most likely impact estimate of 15 percent. This equates to roughly $2.6 million.
Measure I finds and the General Fund are estimated to be impacted by $2 million, and Measure H is predicted to be impacted by roughly $600,000.
The city’s transient occupancy tax (TOT) will also be impacted with an estimate anywhere between 50 and 90 percent. This equates to a loss of $275,000 to $500,000 in collected revenue from TOT.
There is a bright side to all of these negative outlooks however.
“The conservative stewardship of the City has allowed it to accumulate General Fund reserves of approximately
$15 million, including Budget Stabilization ($4.3 million), Catastrophic Emergencies ($2.8 million), and other capital and infrastructure funds ($3 million), considering as well Equipment Replacement ($4.7 million),” said Lollis. “In addition, Measure H has a reserve of approximately $1.5 million.”
This means that the city has millions of dollars they have conserved that is sitting in specific reserves. This will come in handy if the impacts from COVID-19 are more detrimental that previously predicted.
Currently, the city has incurred roughly $800,000 in COVID-19 related activities and responses. The state budget contains provisions that will allow the city to recover upwards of $700,000.
Per the city’s recommendation, the Council voted to approve the budget as it stands, but will revisit the budget during their October 6 meeting to include any modifications that may need to be added due to the impacts of COVID-19.