Due to the impacts of the ongoing coronavirus pandemic, the city of Denison is anticipating a $2.5 million shortfall for 2020.
Rex said the city is currently anticipating a 20 percent drop, equating to $650,0000, in city sales taxes for the remainder of the fiscal year. The majority of the $2.5 million drop will come from city fees, which are anticipated to drop by 10 percent.
However, the city general fund coffers currently maintain about 64 days worth of reserve funding. If the city were to drop to the recommended 60 days of reserve, it would leave about $2.16 million in missed revenue.
The update comes Monday night as City Manager Jud spoke about the city’s finances and adjustments to planned projects in an uncertain economic climate.
“I wanted to give a real high-level overview of the impacts we are anticipating and are seeing in relation to COVID-19 and the economic environment that has created,” Rex said.
“We expect to see revenue decline, not only for the current fiscal year, but fiscal 2021 as well,” he continued. “The planning for that budget is underway right now.”
Of missed revenue, the city has identified about $1.74 million in reductions that can take place. These reductions cover reduced programming expenses, travel and training. However, one of the largest savings will come from vacancies in city staff that are not currently filled, Rex said.
Rex added that he does not currently foresee any reductions of existing staff.
“As we continue to look for opportunities to reduce expenses, we feel like we are pretty good with where we sit with the general fund considering we have conservative estimates for reductions,” Rex said.
While the city could dip into the 60 days of reserve, Rex said the city instead wants to save that option for the 2021 fiscal year in case economic conditions do not improve.
“Our main goal when navigating the 2020 impacts is to maintain our minimum fund balance of 60 days in both general and utilities,” Rex said.
Meanwhile, the city’s utility fund will likely see a 10 percent — $750,000 — drop in revenues. Rex said in periods of recession it is common for people to use less utilities, while others simply will not be able to pay.
During recession people typically use less utilities, others will struggle to pay.
Currently, the fund maintains 68 days of reserve. Through these funds and nearly $474,000 in expected reductions, Rex said the city is prepared to nearly break even in utility funding.
With regard to current and future projects, the Rex said that the city is moving forward with improvement projects on Flora Lane and the 2020 street overlay project as contracts have already been signed.
The design for improvements to Waterloo Lane are current under design, but city staff expect to only pursue improvements at the intersection with Lang, as it is a part of the ongoing Katy Trail project.
City staff postponed interviews with potential contractors as a part of the D3 project, which will see improvements to downtown streets and alleyways. However, Rex said the city anticipates interviewing the two applicant firms to at least hire a construction manager at risk.
The construction itself could be delayed by a year depending on the property values in the area. Rex said he wants to hold back and consider not only current but future valuations before the city is ready to move forward.
In fire department projects, Finance Director Renee’ Waggoner said the city is still moving forward with construction of its West End Fire Station and still plans to purchase a $1.4 million ladder truck.
The truck was originally anticipated to be delivered by later spring but production delays have pushed this back, she said.
Michael Hutchins is the local government reporter for the Herald Democrat. He can be reached at firstname.lastname@example.org.