Charlottesville City Council briefed on $5 million shortfall in current fiscal year
The fallout from the economic shutdown related to the COVID-19 pandemic means that Charlottesville is facing a tougher financial future than would have been expected. Last night, the City Council got an update on the city’s financial picture. Ryan Davidson is a senior budget analyst with the city. (read the report)
“There’s been a marked decline in many of our revenues and our new revenue projections are approximately $5 million than what we had previously presented to City Council,” Davidson said.
Specifically, meals tax collections are $2 million lower than had been forecast in September, and transient lodging tax collections are $1.86 million lower. But not all sources of revenue are in the red.
“Licenses and permits,” Davidson said. “This is one bit of good news! We are seeing continued strong performance in our building and plumbing and our other permits. We’re expecting almost a half million increase.”
Davidson said in the worst case scenario with revenues that continue to decline, the city could end up with a $13.2 million shortfall by the end of the year. To manage that shortfall, budget staff are using the cash reserve that Council agreed to put aside when it approved the budget for the current fiscal year. That money would have gone to various items in the capital improvement program. Davidson said the city may also need to use surpluses from both FY19 and FY20.
“That can be up to $4.1 million that we could bring in as the potential revenue source to help fill that gap,” Davidson said. He added that the city is trying to avoid laying off any employees, but it will take a full effort by Council and staff to continue to get through the year.
Davidson reminded the Council there are still just over five months left in the fiscal year, and projections can change over time as conditions fluctuate.
“Let’s try to manage to the worst case scenario, then if things are better than that, then we will be prepared for that,” Davidson said. “And if they’re better than that, we have leverage and we will have resources that we have not yet had to use.”