TITLE
Recommendation to approve the Fiscal Year 2020 (FY 20) One-Times departmental and fund budget appropriation adjustments to help mitigate the FY 20 financial shortfall in accordance with existing City Council policy. (Citywide)
DISCUSSION
The COVID-19 pandemic (pandemic) has significantly altered the focus and trajectory of the City’s finances in FY 20 and the outyears. Previously, the City had been projecting surpluses for FY 20 in various funds, but with the unexpected and deep revenue losses resulting from the Stay at Home orders and business closures, many funds are facing shortfalls, including the General Fund, Special Advertising and Promotions Fund (SAP), and the Tidelands Operating Fund.
The latest projection has the General Fund potentially facing a shortfall ranging from $25 to $41 million, if no corrective action is taken. Heavy revenue losses are anticipated for the year in areas such as sales tax, oil revenue, and Transient Occupancy Tax (TOT). The recently approved allocation from the State CARES Act of $40.3 million will allow the City to cover some of the City’s expenses related to the pandemic but it is uncertain how much of the shortfall this will resolve as costs continue to be incurred due to the unpredictable nature of the pandemic response. The pandemic is also occurring at a time when there are significant one-time funding needs, and trends and factors indicate significant shortfalls in the out-years, including a projected $30 million shortfall that needs to be resolved for FY 21.
The SAP fund has also been severely impacted as the TOT, the fund’s main source of revenue, is experiencing severe losses from the dramatic slowing of the tourism industry. TOT revenue is historically volatile. Past history indicates a pattern where revenue losses from a downturn usually take several years to recover. The revenue losses from FY 20 alone could potentially require up to $5 million from SAP funds available and, without corrective action...
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