With no layoffs, a budget that will likely come in “flat” by the end of the fiscal year, and street projects all in the works, one might say that the city of Redmond is faring the COVID-19 fallout as well as can be expected.
The real financial hit is with Redmond’s airport, where much of what is happening is out of the city’s control.
In a wide-ranging interview with the Spokesman last week, city officials laid out the fiscal fallout of the virus pandemic with a note of caution for the future.
“The big news is that the city budget should be flat to the end of the fiscal year, June 30,” said Jason, city chief financial officer.
In its first official meeting since March 17, the city council was briefed on the city’s financial picture using GoTo meeting, a live, web-based forum, rather than meeting at the council chambers.
“As far as the staff, we have not had to make any staff cuts because of COVID and we are being very careful about staff we do add,” said City Manager Keith Witcosky. “People have adjusted well to working from home or working staggered schedules. About 30% to 35% of the staff are teleworking.”
All city-owned buildings remain closed to the public, except for the airport. Much of the business being conducted is through email or phones.
Budget bright spot
Presently, the city is preparing its budget for the new fiscal year that starts July 1.
“Financially, the city overall is pretty conservative,” Neff said. “That will help us as we move through this pandemic. Our general fund is seeing some impacts on the resource side.”
Two revenue items are contributing to that:
- Transient room tax revenue (collected from hotel room stays) is down about $200,000 from expected revenues. Only about 10% of the rooms across Oregon have been occupied since the start of the pandemic. Instead of an expected $1.1 million the city would have received, it will get less than $900,000 in TRT, Neff said.
- State gas tax is down about 40% due to less fuel usage across the state. Redmond predicted it would net $1.2 million in gas tax revenues, but that likely be just under $2 million now ... another loss of $200,000.
“We were slightly surplusing our budget this year, so with the loss of those revenues we will likely be flat to the end of the year,” Neff said.
“Our challenge is looking into next year to see if the property tax rates will hold steady. (how much do you receive annually?)
Typically, what happens in a recession is that property taxes, business license fees decline and development revenue falls off.
“We were hitting some record figures before the pandemic,” Neff said.
The city had been collecting about 96% of property taxes most years. This year, it expects that collection rate to drop to 92%. For every percentage decline, the city loses about $100,000. So, the city is predicting a $400,000 decline in tax revenue next year.
“Given our reserves, we should not have to cut much,” Neff said. “There are several open positions — 3.5 in the police department — that may not be filled depending on the revenues.”
“We have to be very careful before we add those jobs back in. The longer we can wait on those things, the better,” Neff said.
Working in the city’s favor are the so-called system development charges —planning permits, building permits — which have some healthy reserves and should help the city weather a budget crunch.
Airport losing some flights
Alaska Airlines has canceled its daily flight between Redmond and Portland for the month of May, reports Airport Manager Zack Bass.
In the last two weeks, the airport is running at a staggering 96% of normal boardings. That equates to about 100 people getting on or off a flight, only about 4%. Cancellations are up 60% of normal.
“Boardings in the last month were only about 4,000,” Bass said. “April and May are the hardest hit months, and we can’t predict yet how June will be.” Boardings comprise about 70% of the airport’s revenue.
No city staff at the airport have been let go. It employs about 30 people. But there are also some 350 who work for the private airlines and they have had significant cuts, Bass said.
The airport is in line to receive $8.9 million from the Federal Aviation Administration to help with some costs associated with loses due to COVID-19. Bend Municipal Airport will receive $69,000 and the Prineville and Madras airports are each slated to receive $30,000, according to the FAA.
“That will give us a lot of breathing room,” Bass said. The money can be used for operational costs or debt service.
Road work on schedule
Mike Caccavano, chief engineer for the city, said that since much of the infrastructure work is on a long-term planning process, work ongoing today is relatively unaffected by the current revenue picture, as it was funded by bonds and grants already received.
“We’ve stayed on our same work schedule, no reason to change. Essentially, any project we planned for next year, we already have those funds in hand,” Caccavano said. “In addition, with the schools closed and traffic volumes down, we are able to move faster on paving projects.”
Newly bid projects are drawing a lot of interest from contractors too, so that remains a bright spot.
“We are having a good turnout for the bidding process, so that helps projects come in under projections,” he said.
Morale remains high
“As an organization, we have been really resilient and reacted well to the virus, rather than trying to respond to it,” Witcosky said. “We have steady activity in the building and permit department, and are figuring it out on how to do things electronically. We remain very busy.”
He noted that morale is good in the police and fire departments and they have adequate supplies of protective gear.
“We are fortunate to be working for a city with all the economic construction going around.”