Budget in better shape than expected
The Eureka budget is in better shape than the city was expecting it to be when the COVID-19 pandemic struck.
Eureka’s Finance Director Lane Millar told the Eureka City Council last Thursday that the city was anticipating a big deficit, $2,248,118, going into the budget planning process and that turned out to be larger than expected at $2,804,890. Actual revenues totaled $28,311,190 while expenses totaled $31,116,080, according to the budget data presented at the meeting.
“But we were expecting upwards of a $3-to-$4-million hit to the bottom line,” Millar said. “So in some ways, this is a good story.”
While revenues from taxes and charges for services were down by $552,324 and $333,464, respectively, Millar said the city’s general fund revenue was just 3% below what it was expected to be — $28,311,190 rather than $29,194,751, a difference of $883,561.
“This is not actually as bad as we assumed when COVID hit,” Millar said.
The large declines were in fines and penalties (25% below what was expected), which generated $95,297 rather than $126,500, and charges for services (21% below), which generated $1,260,795 rather than the expected $1,594,259, according to the budget data presented at the meeting.
The decline in charges for services was caused by the pandemic shutting down community services and recreational programs, such as the zoo and sports leagues, Millar said.
“The most surprising thing that I found in the budget numbers is that we actually ended the year with more sales tax than we assumed we would have when we budgeted back in February,” Millar said.
Overall taxes generated $22,151,028 rather than the expected $22,703,352, a 2% decline, according to the budget data. Sales tax revenue was up 1% generating $17,213,523 rather than the expected $17,046,602.
“I cannot explain why that is,” Millar said. “It’s counter-intuitive to me, but so is the stock market right now.”
Some businesses fared better than others during the pandemic, but a look at Old Town retailers shows smaller retailers didn’t do well, Millar said.
“That’s very unfortunate and we should look at ways to help that sector of our business community,” he said.
All other taxes generated revenues below what was expected with the greatest decline, 23%, in transient and occupancy tax revenue, which is collected when people stay overnight in local hotels and other lodging. TOT revenue was expected to be $2,775,000, but ended up being $2,129,458, a decline of $645,542, according to the budget data.
“That’s as bad as I thought it would get,” Millar said, but the gap between expected and actual TOT revenue is equivalent to what would be expected during the final quarter of the fiscal year.
“It’s almost like we lost an entire quarter in terms of revenue,” he said.
The city spent less than what was budgeted, too, with Public Works saving the most, spending 7% less than expected, from $1,375,044 to $1,282,228, according to the budget data. In terms of dollar amount, the Eureka Police Department saw the greatest saves, spending $113,238 less than expected for an actual budget of $13,890,558, a 1% decrease.
“We added an extra $300,000 to our bottom line through these savings,” Millar said.
The city spent less than what was budgeted, too, with Public Works saving the most, spending 7% less than expected, from $1,375,044 to $1,282,228, according to the budget data.