The work that goes into setting a city’s budget is always a bit challenging and time-consuming. But when a worldwide pandemic is thrown into the mix — which impacts the bottom line greatly — things get even more difficult.
Last week the Sedona City Council spent 12 hours going over the proposed 2020-21 city budget. Council members went department by department while knowing that the budget will be affected this coming fiscal year by COVID-19 and the hit to tourism that resulted from it.
“The good news is, we’re in a better position than most,” City Manager Justin Clifton said after the budget hearings. “Imagine if you were trying to scale back your household budget. You may have savings or assets you could liquidate. The more tools you have the easier that is. And that’s how it’s been for us.
“We’ve done so much the last four to five years to set ourselves up well. We’ve been setting aside money for maintenance, for capital improvements, and streets. What that means is, most of those funds have more in them than they need. We can reallocate that to programs we don’t want to stop. If the economy bounces back by next year, we won’t miss a beat.”
Clifton told the Sedona City Council that he anticipated a $10 million shortfall over a 15-month period — $4 million of which is anticipated to come from April to June of this year.
The draft budget discussed last week by council stands at $51.682 million but Clifton expects that to change prior to the tentative budget approval on Tuesday, July 14. The final budget adoption is set for Tuesday, Aug. 11.
What makes things even more difficult, Clifton said, is the uncertainty of things to come. Without having a crystal ball, he said it’s difficult to know if they need to cut $5 million, $10 million or even $15 million.
“We don’t know so we’re going into this as carefully as we can,” he said.
In addition to potentially putting capital improvement projects on hold for a year, as well as discretionary spending, there’s been a hiring freeze on most vacant or new positions. Those positions will still be budgeted in the event the local economy bounces back sooner than expected and those frozen positions can then be filled.
“We could probably fill a few of those positions right now but I’m not going to make that call until we get a couple more months under our belts and I’m more certain than I am now,” Clifton said. “The overall budget will be very similar to this year’s. The reason is, Arizona says once you set that ceiling you can’t go over. So we don’t want to tie our hands and it turns out we recover more quickly and we’re sitting on money we can’t spend.”
So on one hand, Clifton said the budget looks fairly normal, but because of the perceived losses, the city has created several game plans as to how to deal with a shortfall. This helps prepare the city for any “reasonable” worst-case scenarios.
“Other than something that looks like Armageddon, we’re prepared for a second wave [of COVID-19], even if the second wave is worse than the first one,” Clifton said. “We will continue to monitor and adjust as we go. I think we’ll weather the storm very well because of the hard work we’ve put in the last several years by being good stewards of our finances. We’ll be able to spread this out across the organization so nobody has to bear all of the burden because we have a pretty deep well to go to if we need a more significant correction.”
