Note from Tom
Budgeting for the Unknown
By the time this message is distributed, the budget staff and I will be meeting with the City Council to provide an update on where things stand with the City’s 2020-2021 budget (you can join live this afternoon or view a recording on our various channels).
The last time we met with the City Council to discuss the budget was early March. At that time, the projected budget was very solid and dozens of new ideas and proposals to advance our strategic and community values were being prioritized and vetted. Not unlike the situation many residents are experiencing, less than two months later, the budget conversation is more challenging than we could have ever imagined as we deal with the projected financial impact of COVID-19.
To put it in perspective, the General Fund budget went from mostly being balanced to having a $12.5 million (or more) deficit. Revenues that fund the majority of critical City services such as property tax, sales tax, and occupancy tax are (and will continue to be) down significantly. Other revenues supporting special services such as transit and parking will be down significantly as well.
At the same time, on top of the anticipated costs associated with Durham's rapid growth in the past year, we are now trying to anticipate the financial impact of COVID-19 on City operations, residents, and businesses. Job loss, business closures, evictions, homelessness, and many other financial and personal impacts will likely require support from the City as COVID-19 looms for what is predicted to be many, many months.
Although it’s a difficult and stressful situation, I know we will get through this challenging time. Because of the disciplined planning we put in place following the 2008 recession, the City is financially strong and has a fiscal track record that I’m extremely proud of – we’ve earned the highest quality triple-A credit rating, a coveted measure of financial strength. We also have a formalized financial reserve policy that helps us prepare for unknowns like COVID-19, and last fiscal year we were above target with a fund balance of 25.9% of budgeted expenditures ($49.8 million). Will we be able to fund every request, perceived need, or new idea? – certainly not, but we will stay the course of good stewardship of the City’s finances.
Like all Council Meetings, the budget process is open to the public and meetings are being held virtually at this time. We anticipate the entirety of this year’s budget process will likely stay virtual and are exploring many ways that our residents can continue to participate in the process. We have already seen great participation through the website and social media channels, and I encourage residents and community members to participate and share your feedback and concerns.
There is no doubt that we will have to look at priorities and make some tough decisions, but our careful budgeting and planning process will help us weather this financially, and together we will get through this as a community.