The COVID-19 pandemic will significantly impact Paso Robles’ general fund revenues, although it’s still too early to tell how badly.
Ryan Cornell, the city’s interim director of administrative services, compiled a fiscal analysis based on national averages and “best practices today” that he presented during the City Council’s March 27 virtual meeting. Cornell said that Oxford Economics
, a global economic leader of forecasting and analysis, projects that tourism will decline in March and April and take the rest of the calendar year to rebound.
PHOTO COURTESY OF THE CITY OF PASO ROBLES
LONG-TERM UNKNOWNS Paso Robles is bracing for fiscal shortfalls due to the coronavirus.
The city’s three largest general fund revenue sources—sales tax, property taxes, and transient occupancy taxes (TOT)—comprise roughly 75 percent of the city’s general fund revenue. He said the shelter-at-home mandate issued by Gov. Gavin Newsom and SLO County, will have significant and immediate impacts on sales taxes, TOT, and fees for service.
According to the staff report
, the mandate could also potentially impact property tax revenues over the next year or so, depending on trickle-down effects of non-essential businesses needing to stop operations. The auto and transportation industry, fuel services stations, restaurants, and hotels will be the most affected. Cornell said he hasn’t had an opportunity to examine the city’s other major revenue sources, such as community development charges for services and parks, recreation charges for services, and permits or licenses.
“With this all being said, based on the information I have thus far, the city is looking at about a $4 to $6 million hit to the fiscal year 2019-20 budget. That’s close to a 10 to 15 percent hit in just three months of the year,” he said. “The city’s budget revenue is right about $46 million, so this is a significant impact on the revenue stream of the city.”
Despite the projected loss, Cornell said the city is better off than most as it has approximately $18.6 million in reserves and $6.6 million in its Section 115 Trust—an account to separate agency funds from general assets for the purpose of funding essential governmental functions—that can help supplement the city’s pension expense.
In an effort to reduce spending, the city has pushed the pause button on hiring personnel except for two positions that were already budgeted for: a police officer and dispatcher. Paso is also reviewing capital projects that can be delayed for the time being.
City Manager Tom Frutchey said the city has done just about everything it can do to make sure it’s spending every dollar as cost-effectively as possible.
“I can tell you and assure you our staff act as though the money they’re spending is like their personal money, in a sense that they don’t waste any of it,” Frutchey said.
Normally, Paso would adopt a detailed two-year budget where it can link long-term strategic plans with its financial planning process, but the current known state of effects from the virus doesn’t allow long-term planning. For now, the city has done what it can to address its funding shortfall without cutting back on essential services, according to city officials.
The City Council voted in favor of modifying its normal two-year budget process to a one-year budget for the fiscal year 2020-21. It will come back before council members in June. ∆