The city plans to cut its budget by an estimated $2.9 million amid possible decreased revenues from sales tax and utility sales, according to City Administrator Phillip Patterson.
Due to the possibility of the decrease in revenue because of the covid-19 pandemic, Patterson asked city staff to tighten their budgets by about 8 percent without impacting full-time personnel, during Tuesday's virtual city board meeting.
The city may incur an estimated loss in revenue of 8 percent from all sources, including sales taxes and utility sales, Patterson said in a later interview.
Patterson said the city will not see the revenue from March's sales tax collection until the end of May because sales tax receipts are two months behind when they are spent.
"We won't see the reduction and the impact of covid-19 on our sales tax until that time," Patterson said.
The estimate of lost sales tax revenue is based on a model obtained from the city of Bella Vista and developed by the University of Arkansas, he later said. Finance Director Christina Petriches also used North American Industry Classification System (NAICS) codes to estimate which types of businesses will likely see a significant drop in sales, he said.
The sales tax revenue impact may not be as great as projected since there may be more retail sales occurring at certain businesses within the city and because restaurant sales have not stopped entirely, with many offering curbside service, he said.
The city is also experiencing a decrease in electric department revenue due to the closing of the dorms at John Brown University, public schools and La-Z-Boy, Patterson said. Other companies have reduced their shift work which also contributed to lower electric revenue, he said. Water and sewer sales have been largely unaffected, he later said.
All together utility sales were down around $250,000 this quarter, Patterson said. The majority of the reduced sales occurred during the month of March, he said.
Cutting the budget
The city has identified an estimated $2.9 million in cuts to its roughly $64 million budget, Patterson said. The budget reduction includes both small and large cuts to operations and projects across city departments.
"This all assumes the recovery is relatively short, less than six months," Patterson said. "If the recovery is greater than that, it is likely we will have to make more cuts."
The cuts made to the budget include hiring freezes and leaving open positions unfilled, Patterson said. Despite not cutting into full-time personnel, there still will be furloughs of part-time employees at the library and utility department starting May 4 until the end of the month, he said.
Patterson said he has already spoken to staff members who will be furloughed. If the reduced revenues aren't great and the city is able to reopen the library and city hall, the furloughs could be shorter, Patterson said. If the loss of revenue is greater than expected, the furloughs may have to be extended, he said.
Among the cuts, the city is placing several key projects on hold, Patterson said. The largest projects the city will suspend include the 2030 Comprehensive Plan and the Main Street Design project, Patterson said. The postponement of these two projects alone will save the city $207,000 and $130,000 respectively, Patterson said. Another project the city cut was the Harvard Street side paths, which saved $620,000, Patterson said.
In response to Patterson's report, Director Bob Coleman asked the city clerk and finance director to reduce his salary by 50 percent for the next six months. Coleman acknowledges this is not a lot of money, but wants to help.
"If I'm not at the point where I think that I'm responsible for making a contribution to do this," Coleman said, "Then I shouldn't be where I am and that's what I'd like to have done."
City directors receive $264 per meeting, Patterson said. Director compensation is set collectively by the board and no individual director may alter his or her own compensation, Patterson said. Coleman was advised accordingly, he said.
In an added measure of safety Patterson said the city canceled coffee with the board on May 2 due to covid-19 pandemic and will try to work the event in at a later date.
Aquatic center
Patterson said it is unlikely the Family Aquatics Center will open at the end of May. Currently, the city is considering a plan to open the center in July and August on a reduced schedule.
Patterson said staff is looking at Center for Disease Control and Prevention recommendations for aquatic centers and discussing the issue with the I-49 corridor cities of Bentonville, Fayetteville, Rogers and Springdale.
"We don't believe that covid-19 can be transferred from the water because of the chlorine in the water," Patterson said. "But it could still be transferred from coughing and sneezing while you're in the water next to somebody else and how do we keep the six-foot separation?"
Staffing the aquatic center is also a problem because the city typically hires John Brown University students for the lifeguard management positions, but with no students at the campus, finding employees for the summer has been difficult, Patterson said.
Other business discussed included:
• Approval of utility easements for the 300 block of South Country Club Road.
• Approval of a contract with Diamond C Construction for the demolition, removal of debris and replacement of storm damaged airport hangars for $113,689.
• Appointment of Steve Gorszczyk to the Benton County Solid Waste District Board.
• Placing Ordinance 20-08 regarding drive-through regulations on its second reading.
• Approving Resolution 22-20 establishing the powers of city administrator due to the declared pandemic emergency.
• Approving Resolution 23-20 declaring intent to obtain funding from the Arkansas Natural Resources Commission for improvements to the water treatment plant.
General News on 04/26/2020