Coronavirus: Springfield estimates 15% reduction in 2020 general fund revenue

The City of Springfield has seen a dip in revenues so far this year as the COVID-19 pandemic has had an immediate economic impact in the area.

So far, the city is projecting a cut of 15% in general fund revenues. Roughly 80% of the city’s general fund revenue comes from income tax, which saw a dip during the month of April.

The pandemic has also impacted other sources of city revenue, including lodging taxes, gas taxes and fees for city services. There are no plans to cut city staff in response, however, according to Bryan Heck, who is Springfield’s city manager.

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City departments have been asked to focus only on essential expenditures. The city has suspended filling vacant city positions and frozen seasonal hiring. In addition, a little over $1 million has been cut from the city’s permanent improvement fund as of last week. The city had originally projected revenues for that fund to be about $6.7 million.

As a result, the city is looking at what projects and purchases associated with that fund can be suspended or moved back, Heck said. That is all part of efforts made by the city to control its spending during this time, he added. Though some of those projects have been cut for this year they could be revisited in future years depending on how fast the city can recover from the pandemic, according to city officials.

“I think at this point in time we are in a good position were we would not have to impact current personnel,” Heck said.

The economic impact of the pandemic is also linked to state guidelines and a stay-at-home order implemented in March that called for the closure of businesses deemed nonessential. Residents were urged to shelter in place when possible and those who could were asked to work from home.

The pandemic has also caused supply chain issues in certain industries, especially automotive manufacturing and supply. That has caused several companies with manufacturing facilities in the area to temporary cease or limit their production. In some cases, those stoppages lasted for more than a month and left employees furloughed or temporarily seeking unemployment benefits.

Before the pandemic, city officials had anticipated a boost in general fund revenue for this year following a trend seen in 2019. As a result, the city commission approved a budget in December, which predicted general fund revenues of $47.5 million. That included at least $37.5 million in income taxes as the economy was in an upswing.

However, current projections expect a loss in revenue opposed to the gain predicted in the beginning of the year. But, the total impact that the pandemic will have on the city’s budget for the remainder of the year depends on how quickly the economy rebounds, said Mark Beckdahl, the finance director for the City of Springfield.

A number of businesses have been allowed to reopen this month. But they are required to follow additional safety directives from the state.

Measures aimed at preventing the spread of the virus were implemented in the state in March. During that same month, Springfield declared a state of emergency.

State measures have had an economic impact and there has been an uptick in unemployment filings.

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The scope of the pandemic has also impacted local business operations as well as caused venues to close or postpone large events that are considered local tourism drivers.

The pandemic has affected area businesses differently. Some have seen an increase in the demand for their goods or services. That has lead to some seeking additional workers.

There has been a roughly 9% dip in city income tax collections for this year ending on April 30 when compared to the same period in 2019.

For 2019, those collections amounted to $14.3 million compared to just a little over $13 million this year. Beckdahl said the city has been able to control its expenses and has seen a small surplus in April. However, it is unclear what those numbers will look like for this month.

The city did not see the economic impact of the pandemic until April, he said, noting that income tax revenue was up in March by 2% compared to 2019. However, general fund revenue as a whole was $3.2 million in April compared to the $4.9 million for that month in 2019.

It is unclear what impact this will have on the city’s “rainy day” fund, that was projected to have a fund balance of a little over $7 million for this year, according to Heck.

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