Coronavirus Financial Plan

for FY 2021 Proposed Budget

Specific Program Level Impacts

The City is tracking the virus and its effect. All changes to service levels are being updated on the City's website. Click on the link at right to see the updated information.

The City has identified several program areas we anticipate will have changes and challenges including additional funding or lower revenues in FY 2021. The FY 2021 Proposed Budget has a reserve for financial uncertainty to allow the City to respond with some flexibility as the changes develop.

Impact on Revenues

Revenues will be significantly impacted.

The Coronavirus pandemic has led to a sudden and extensive economic impact on local businesses. Businesses have had to temporarily shut down or scale back operations. The City of Roswell will see a drop in some of its major revenue sources such as sales tax, business taxes and licenses and permits. Due to reduced travel, shopping, tourism etc. revenues from hotel/motel taxes, fees and fines will also be reduced. Staff is projecting a significant drop in revenues from the categories mentioned above in the fourth quarter of the current fiscal year. Sales Tax revenue in FY 2020 is expected to fall 10% below the budget amount. Overall, General Fund revenues are expected to end FY 2020 nearly 2% below budget. Savings in expenditures will allow the City to end the year in a positive financial position.

The chart to the right highlights total revenue proposed for FY 2021 which shows a significant impact as the economy reacts to the Coronavirus outbreak. While the biggest source of revenue, Property Tax, will likely remain stable for the next year, it too could see a drop as the other economic factors impact the housing market.

Revenues for All Funds

Sales Tax (All Funds)

Short Term Impact

Forecasting the financial impact of the Coronavirus this year.

The City is on a strong financial footing and we are prepared to deal with the financial impacts of COVID-19. The City maintains a General Fund Reserve equivalent to 25% of our General Fund expenses, approximately $18 million, that could cover three months worth of expenditures. Additionally, the FY 2021 budget sets aside an additional reserve of $1.6 million to address the financial uncertainty caused by COVID. The FY 2021 Proposed Budget has allocated approximately $500,000 of General Fund fund balance to cover operating expenses. This action is a temporary deviation from the City's budget principles of utilizing recurring revenue for recurring expense.

To reduce the financial impact of the pandemic, the city has decreased the use of part-time employees by 78% and implemented a hiring freeze. Departments have been asked to halt discretionary spending and some capital projects are being delayed. The FY 2021 budget focuses on core services and programs and defers most new department budget requests.

Staff will continue to monitor the impacts of COVID-19 and provide regular updates to Mayor and Council. As the financial impact of COVID-19 becomes more clear, additional funding may be prioritized for key operating and capital expenses.

Long Term Impacts

The effects of COVID-19 will be felt well beyond the first two quarters of FY 2021. At this point it is difficult to forecast the full financial impact of the pandemic on the City's revenues. With unemployment being at an all time high, consumer spending is expected to drop significantly, which in turn will impact revenues.

The City is in a strong financial position and stands ready to make the necessary adjustments to ensure continued stability.