COVID-19

Budget Update
April 27, 2020
2
 Agenda 3

• Recap of April 13 presentation

• Grant funding opportunities

• What are we facing for next fiscal year?

• Recommendations

• Requested Council action

4
 We Must Continue To Be FIRM… 5

• Focused – on the core, essential services

• Innovative – how we deliver services for the 21st century

• Resilient – dealing w/ health, financial, and operational impacts

• Mitigate – lessen economic impact on our community

 6

April 13 Recap
 April 13 Summary 7

• Proactive measures were implemented in early March

• To protect the safety of employees and customers

• To begin addressing financial impacts from health crisis

• Mitigate impact to businesses and non-profits

• Improved fiscal management and new financial tools are critical to attacking challenge

• $18.2 million increase in reserves

• Creation of the budget stabilization fund

• $30 million in annual pay-go funding

 April 13 Summary 8

• Priorities will remain public safety and streets

• Budget adjustments include:
• Drastically reducing non-essential services

• Reducing non-essential construction projects

• Temporary pay decreases for all (excluding uniform positions)

 Breaking Down the General Fund 9

• Personal Services includes salaries,

benefits, and taxes

• Operating costs include:

Personal Services
• Utilities
$96.2
• Fuel & vehicle maintenance
21.0%
• Pay-Go (streets, public safety, ADA)
• Animal Shelter
Police and Fire
$264.7 • Leases
57.8% • Communications (phones, etc)
Operating Expenses • City grant match
$97.1 • Maintenance & repairs
21.2% • Materials and supplies
• Legal expenses (settlements, outside
counsel)
• General liability and property insurance
• Contract services (groundskeeping,
janitorial, security, etc)
 Tackling the Challenge 10

• City Manager initiatives to address impacts related to:

• Health

• Financial

• Operational

• Communities (Partners) in Excellence – aligning efforts and leveraging

resources

• These initiatives will allow us to be proactive w/ our responses

 11

GRANT FUNDING
OPPORTUNITIES
 Grant Funding Opportunities 12

• Multiple sources of funding available from Federal and

State agencies
• We created a cross-functional team, led by our Grants
Administrator
• Working very closely with every City department to
identify and apply for all possible grants
• Identifying areas of need not currently addressed by
Federal or State funding
 Grant Funding Opportunities 13

• Housing & Urban Development - $5.75 million awarded

• Health & Human Services - $1.48 million pending award

• Department of Transportation - $40.78 million formula grant

• Federal Aviation Administration - $15.43 million formula grant

• Department of Justice – Police application for $604K due 5/29

• FEMA – can submit for all allowable costs, 25% city match

• Petco Foundation, PetSmart Charities, Maddie’s Fund – submitted applications for total of
$160K for animal shelter

• Department of Treasury – Economic Stabilization for States, Municipalities, and Tribal

governments
 Department of Treasury 14

• $150 billion Coronavirus Relief Fund to provide for payments to State, Local,
and Tribal governments related to the impact of the COVID-19

• Only be used to cover expenses that:

• are necessary expenditures incurred due to the public health emergency

with respect to the Coronavirus Disease 2019 (COVID–19);

• were not accounted for in the budget most recently approved as of

March 27, 2020 (the date of enactment of the CARES Act) for the State
or government; and

• were incurred during the period that begins on March 1, 2020, and ends
on December 30, 2020
 Department of Treasury 15

• Allocation is by population and each state is guaranteed at least $1.25 billion

• Texas’ allocation is $11.2 billion

• Local governments with a population that exceeds 500,000 are eligible for receipt
of direct payment from the Treasury

• Eligible local governments must submit the certification required by the CARES Act
to Treasury by the deadline set forth below in order to receive payment

• We submitted our certification on April 15, in advance of the deadline

• On April 23 we received a deposit of $119 million from the Treasury

 16

WHAT ARE WE FACING

NEXT FISCAL YEAR?
 FY 2021 General Fund 17

• FY 2021 preliminary estimates reflect a $60 million deficit, before any

budget adjustments

• Our assumptions are based on the declining economic conditions

continuing through the third quarter of next year before stabilizing

• Preliminary estimates are based on limited data and uncertainty

related to current health crisis

• These preliminary estimates will change as we continue to monitor the

economic condition and revenue collections
 COVID-19 Impact on General Fund 18

Revenue Expenses
$500
MILLIONS

$482.7
$480

$458.1
$460

$440 $434.2 $431.7

$429.0
$422.4
$420
$401.4 $399.9
$400

$380

$360

$340

$320

$300
FY 2018 Actual FY 2019 Actual FY 2020 Estimate FY 2021 Estimate

*FY 2020 and FY 2021 estimates are before adjustments

 FY 2021 General Fund Revenues 19

• Property taxes

• No change in current overall tax rate and no new debt issuance

• 1.0% increase in assessed taxable values

• (17.2%), or ($16.2 million), decrease in sales tax collections

• 17.0%, or $9.0 million, decrease in franchise fees

• 43.1%, or $3.7 million, decrease in fines and forfeitures

• 20.7%, or $2.7 million, decrease in licenses and permits

• 31.5%, or $4.2 million, decrease in bridges transfer

 FY 2021 General Fund Expenditures 20

• $16.5 million increase for police and fire

• $1.6 million increase in civilian personnel costs

• $4.0 million increase for park bond projects operating costs

• $2.6 million increase in misc. operating costs – contracts, utilities, etc.

 21

RECOMMENDATIONS
 Temporary Pay Reductions 22

• Amend FY 2020 Budget Resolution Item #20 to

implement the following pay reductions for a 12 week
period:
• 5% reduction for Executive level 1 and 2

• 2% reduction for Executive level 3, 4, 5 and Legal pay plan

• 1% for all other civilians

 Temporary Pay Reductions 23

• Approx. 3,832 civilian employees impacted

• 96.4% in the General Service or Professional pay plan
• 2.8% included in the Executive 3, 4, 5, or Legal pay plan
• 0.8% included in the Executive 1 and 2 pay plan
• Does not impact uniform police and fire employees
(collectively bargained)
 Temporary Pay Reductions 24

• Recommended pay reduction

• Has less financial impact to General Service and

Professional/Managerial employees (96.4% of civilians)

• Smoothes out reduction over 12 weeks, instead of all at once

• Generates almost as much savings as a one day furlough

($453K vs. $553K)

• If we reduce pay or furlough one day we would still have to make

sure exempt employees met FLSA minimum salary requirement
 Temporary Pay Reduction vs Furlough 25

12 Week Pay Reduction 1 Day Furlough

$2,500
$2,240

$2,000
$1,686
$1,500

$1,000
$654
$500 $396
$201
$66 $110 $121
$0
General Service Professional / Managerial EX 1 - 2 EX 3 - 5

Based on average salary in each group

 Furlough Policy 26

• City and Federal efforts were implemented to support

employees through the provision of leave
• Many employees who are unable to perform their work
from home have exhausted available leave
• Closure or indefinite delay of several City facilities,
services, projects and programs has drastically impacted
the City’s operating economy and budget
 Furlough Policy 27

• COVID-19 is expected to have a widespread and long

lasting financial impact within the local community
• Estimating $33 million revenue impact in the current
Fiscal Year
• Financial and operational impact is anticipated to
continue for an unknown period of time
• Would provide the City the ability to address significant
budgetary shortfalls during the economic downturn
 Furlough Policy 28

• A furlough is a less severe alternative to a lay-off or staff

reductions
• Allows an employee to remain employed as opposed to
requiring a separation in employment
• Once declared, would immediately enable employees to
become eligible for state unemployment benefits
• Unemployment & CARES Act provides an additional
$600 per week until July 31, 2020
 29

REQUESTED
COUNCIL ACTION
 Requested Council Actions 30

• Resolution to amend the FY 2020 budget resolution

allowing for temporary pay reductions

• Resolution approving the establishment of a furlough

system and adoption of the furlough policy