AIRWAY HEIGHTS — Like many municipalities across the country grappling with a struggling economy amidst the COVID-19 pandemic, the city faced revenue losses in 2020. As a result, developing the 2021 budget has been a challenge, a fact city manager Albert Tripp shared with council via a letter and at council’s legislative session Nov. 16.
“We anticipate the City will end 2020 with 15%-30% less tax revenue than planned due to a reduction in revenues from sales taxes, admission taxes, hotel/motel lodging taxes, motor vehicle gas taxes and building permit revenues,” Tripp’s letter reads. “The unforeseen reduction in revenues for 2020 required the city to reduce the adopted budget of $10,954,801 by 9.7% or $1,071,743.”
The city had to reduce its budget through hiring and spending freezes, furloughs, reducing programs and eliminating travel and training. It also utilized a short-term interfund loan. Tripp said this saved the city $1,071,743.
“We all know that due to COVID-19, the city has seen a drop in some revenue sources,” Tripp told council. “We see a decline in building permit activity. Property taxes have been relatively stable … we’ve seen a reduction on the sales tax side.”
Tripp estimates that the tax revenue in 2021 will remain at or below 1%. This will likely prove to be challenging for the city, which will have an increased demand for services.
Domestic violence calls are up 50% from 2019, and substance abuse calls for service have risen as well, according to Tripp. Emergency calls for service are up, as are street maintenance needs.
The city operates three budgets: a general fund, street fund and utility fund. Each fund is independent and can’t pay bills and expenses from other funds, with the exception of the street fund, where revenue is transferred from the general fund.
“(This is) due to the way street maintenance is funded solely by gas tax revenue which is inadequate for performing street maintenance,” Tripp’s letter states.
The proposed general fund would face a shortfall of $1,319,608, with revenues of $9,199,883 and expenses of $10,474,492.
General fund revenues come from sales tax, building permits, liquor taxes, property taxes and business license fees. It pays for police, fire, courts, building, planning, parks and recreation, general government administration and assists with street maintenance.
“This budget is designed to give council and the community a holistic view of the resources necessary in order to provide these services,” Tripp said. “We also recognize the economy has shifted, and with these reduced revenues we have to work in order to align the proposed expenditures with the revenues. That’s something we’ve already started…but there will be some challenging choices that the community will have to wrestle with.”
The proposed preliminary general fund would add two new full-time patrol officers at a cost of $193,839, which Tripp said would be to help with the increased calls for service. A temporary court clerk would be added at a cost of $74,089, and a public defender would be added at a cost of $44,000.
A records clerk position would be eliminated, as would a building inspector position, saving $65,000 each. The total cost of staffing changes would be $181,928.
Part-time recreation staff would be reduced.
The proposed street fund would also have a small shortfall, with estimated revenues of $459,490 and expenses of $470,957.
Tripp said this is due to a reduction in gas taxes, which has occurred because there’s a lower demand for fuel purchases as people are more likely to stay home during the pandemic.
The proposed preliminary utility fund, which pays for water, sewer and wastewater treatment systems, reflects $6,722,339 in revenue and $7,075,018. Tripp’s proposal doesn’t have a proposed water or sewer rate change, though the city is scheduled to look at utility rates and create a forecast for the next five years in 2021.
The preliminary proposed budget isn’t necessarily the final budget as the city grapples with the problem of reducing expenses and allocating limited resources.
“The budget deliberations are scheduled to take place throughout November and into December before adoption,” Tripp’s letter concluded.
Tripp’s presentation of the proposed preliminary 2021 budget was held during the public hearing section of council’s meeting and will be brought back to council at future meetings.
Drew Lawson can be reached at [email protected].
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