Balancing a pandemic budget

2020 hasn’t been the year any of us had planned. The City of Starkville had expected rising sales tax numbers just like we have had over the past 2 decades. We had planned on having lots of visitors to games and events. We were forced to change plans.

Our reality has caused us to make hard decisions. We have not in the past several decades had to make these types of choices, such as temporarily furloughing our greatest assets, our people. There are more hard choices yet to come. We have to face the unrelenting fact that our sales tax and food and beverage tax will be down significantly from previous years. These sources of revenue have been what has supplemented our budget so that we can have the safest community with a highly skilled and educated and accredited police force; a fire department that is one of the best in the state and employees who are paid a reasonable and fair wage. These are criteria for our community that are worth the cost.

Our future revenue numbers are anybody’s guess, yet we still are charged with preparing a responsible budget for the upcoming fiscal year. We are using a “no athletics” scenario because that is the only prudent way we can predict to make it through this next year. This means that we are projecting that we are going to be anywhere from $800,000 to $1.1 million dollars short of our current year budget.

Do we cut costs or do we make up that shortfall? Starkville has never spent on extravagancies. We drive our vehicles until they are beyond repair. We use our equipment until it fails, we repair it and then we use it again. We don’t travel and we train on an as needed basis. We look for grants before we spend and we work efficiently and effectively. We partner with our community government entities to make the most of all our assets. Cutting back is cutting meat not fat.

How do we make that shortfall up? We raise millage. We knew that we would need to raise millage to pay for our 20% match share of the $12.6 million dollar BUILD grant that we received last year. Our acceptance of that grant was predicated on the realization of that need. It is to revitalize Highway 182 and make it an economically viable location for future businesses. The plan was that 1 mil would help support that obligation. To abandon that project makes no sense at all because when the pandemic is no more, Highway 182 will still be there needing attention in order to be a viable economic element for our downtown district. BUILD grants are extremely competitive and hard to come by.

Fast forward to February: the virus has now created the immediate need for us to raise taxes. That’s another mil. This still doesn’t cover the loss. It will get us through about 6 months of the coming year. If the worst case doesn’t materialize then we may not have to take the next step which is to restructure our debt. That is the equivalent of remortgaging our home. It will help our cash flow in the short run, but we will still be paying for it in the long run. For right now, the short run requires us to push our obligations a bit further down the road as we bet on the recovery to be within the next 2 years.

There is no scenario in which raising taxes is a desirable action. There is also no scenario in which shutting a fire station, laying off police officers, closing our parks or not paving the streets is an acceptable outcome.

We furloughed some of our staff this summer when we knew they would be able to receive the additional funds for unemployment benefits. That led to a reduction in services and our ability to meet expectations in a timely manner. Parks were closed and streets and water leaks were much longer getting repaired. That unemployment supplement has now run out and our people are back at work.

One of the things that these times has highlighted is the need to be less dependent on such a volatile source of revenue as sales tax has proven to be. A reasonable and stable balance between property and sales tax is important and that is a take away lesson for this board and all those who follow.

I certainly hope this a once in a 100 year or more occurrence, in which case these lessons will probably have to be learned all over again, but just in case, we can live the boy scout motto and “Be Prepared”.