The city of Sedona will take a major hit over the next year as a result of COVID- 19.
Despite that fact, city officials feel Sedona is in far better shape than many others throughout the state. During the Tuesday, April 28, Sedona City Council meeting, City Manager Justin Clifton pointed out that with the city’s budget primarily made up from sales and bed tax, it’s inevitable that it’s going to take a hit.
“The bottom line is, our city’s finances will swing wildly based on visitation or lack thereof,” he said. “We’ve built a model that anticipates below historic occupancy, at least through the end of next fiscal year,” which ends Wednesday, June 30, 2021.
“Based on a model that would say this month and next month’s occupancy will be very, very low — 10% occupancy — and then slowly recovering but never reaching the level we were during the pre-COVID time frame, it projects losing about $10 million in revenue.”
He said as the next fiscal year progresses, the city will have a better picture as to whether or not they have under or overestimated those potential losses.
But, it’s not all doom and gloom. Clifton said thanks to robust growth in recent years via tourism, along with cautious spending, the city is in a pretty good situation, considering everything going on.
“Other communities have already implemented layoffs but we have not,” he said. “My approach, given support by council, would be for that to be a last resort.”
Last year the city ended up with about $4 million in unallocated reserves, which can be used to cover operational costs right away, Clifton said. Other sources to make up for the loss may come by way of capital improvement projects. In some cases they can be deferred and in other cases ones that the city thought could be paid with cash could instead be financed.
In addition, Clifton said it looks like there is about $6 million worth of projects that could be deferred to a later date.
“We also have to make sure that there is $6 million from general fund transfers over recent years, opposed to other restricted sources that are also in the capital fund,” he said the day after the meeting. “If we verify that there is at least $6 million from general fund transfers, we can defer those capital projects, put that money back in the general fund and replace the funds in future years as we recover from the recession.”
The city will also tighten its collective belt in terms of travel and training expenditures as well as professional services and will be implementing a hiring freeze for some positions.
“Across the board we will lower operation costs and in a real pinch we can go really deep into the bag of tools to identify potential sources,” Clifton said, alluding to making cuts or taking funding from other sources.
