Everyone's attention has been rightly focused on the health implications of the COVID-19 pandemic, including the City of Richardson, which has put public health at the top of its list of priorities. The question of "Who's in Charge?" has gradually settled on the answer, Texas Governor Greg Abbott. The City of Richardson will not enforce any provision in the City's own March 23, 2020 Order that is inconsistent with the Governor's Executive Orders GA 15, 16 and 17. With the Governor in the driver's seat on the pandemic response, the City can start giving some attention to the impact COVID-19 will have on other City matters, particularly the City's finances.
The City of Richardson's fiscal year runs from October to September. The first six months of FY 2020 has had positive results, right on track with the budget. But the final six months are expected to be a challenge, as are all twelve months of FY 2021, which starts in October, 2020. Nevertheless, the City expects to have a "balanced finish" to FY 2020, maintaining its goal of a 70 day fund balance in the General Fund.
How will it manage to do this? Hiring has been suspended. Staffing/compensation strategies are being explored. Departmental expenditures are being reduced to only essential needs. Some smaller, pay-as-you-go projects are being delayed. Fund balances for these pay-as-you-go projects will be reallocated to immediate operational expenses. That will probably mean longer-term reliance on bond debt when those projects can no longer be deferred, but that will be a discussion for future budgets.
One aside here is that the recent reduction in trash and recycling collection was solely due to COVID-19 infections and quarantines impacting staffing availability. The City remains committed to restoring full service as soon as staffing permits. Also, the City plans to have key projects go forward: streets (Main Street, Campbell Road, W. Prairie Creek Drive), facilities: (Public Safety Campus, Fire Station #3, Senior Center).
Where will the money come from? The three largest revenue sources for the City are property tax, sales tax, and franchise fees. Property tax is relatively stable and the majority of it for FY 2020 has already been collected. Sales tax is the most variable revenue source. Early projections are for a reduction of 18% in budgeted sales tax revenues or $6.8 million. Miscellaneous other reductions (reductions in collections of property taxes, building permits, Civic Center and Eisemann Center fees, etc.) will result in another $5.3 million shortfall in budgeted revenues to the General Fund.
The Water/Sewer Fund and Solid Waste Fund expect to see a fiscal impact of $3.1 million and $500,000, respectively, due to reductions in commercial needs and the ability of some residents to pay. A healthy fund balance will help absorb some of these shortfalls.
The Golf Fund expects to have no fiscal impact. Sherrill Park continues to operate with its clubhouse closed and social distancing rules in effect.
The Hotel Fund expects to see a $2.1 million fiscal impact, some of which will be made up by canceling Eisemann Campus renewal projects.
All of those shortfalls sounds daunting, but the City still seeing a "balanced finish" to its FY 2020 is encouraging. Even more encouraging is the recognition of the role the City can play in providing a stimulus for the local economic recovery with its own operations, bids and services. Even in the face of reduced collections of property tax, sales tax, and franchise fees, the City's good credit rating provides a fallback to keep essential needs moving forward. All told, the City plans to help us all weather the storm.
This article was first published in "Richardson Living."
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