Thread by @shayshinecastle

Yvette Bowden leading the presentation on the Boulder business impact survey. You can read about that here: boulderbeat.news/2020/04/25/sur…

Bowden: Biz with between 2-49 employees have been impacted the most. They were on very tight margins and are mostly leasing their facilities. (I think 62% of biz said they leased but I can't remember for sure.)

At the time of the survey, most biz felt these changes (layoffs, furloughs, pay cuts, etc.) would be temporary. But that was weeks ago, Bowden says. We're hearing ppl are worried about restarting.

On the Zoom chat just now, Wallach (presumably) commenting on the odd beeping noise in the background: "Morse code for when do we take a break?"

Slide 41 puts BoCo's unemployment rate at 4% for March 2020.

Vs. 2.5% last March.

85% of businesses surveyed indicated they need assistance

"Financial help was first in mind," Bowden says. "The fixed expense don't go away."

Access to loans is the least-popular type of help ppl say they want. (48%)
Help for employees: 56%
Help with rent: 63%
Access to grants or funding: 67%

Biz "expect challenges to increase if this goes beyond May," Bowden says. "I think I'm understating that."

"We don't think we're jumping from response to recovery. .... We're going to look at strategies that reduces scale of widespread recurrence (of COVID) but helps ppl retool business."

That may not be a role for the city; we'll need to keep working with partners.

"We need to think about the long-term impacts" of people who may continue to work from home. "It's not looking so bad for some people."

That will impact retail sales: fewer ppl coming to lunch or the theater after work, Bowden says. It may change how much office space people want.

"This is the time to help all businesses and to think of ourselves as consumers and workers."

There will be a survey of primary employers in the fall

Wallach: How are you going to update what we have today to give us a more real-time picture? It seems April-May are the key time.
Bowden: We're going to be watching sales tax, unemployment.

Bowden: Our biz "have survey fatigue. What they are really are desiring is a path forward."

We're going to be listening; I'll be watching vacancy rates.

Particularly on the Hill. We have double-digit vacancy up there and a fully closed campus, Bowden says. "This is a crisis."

We could repeat portions of this survey in 6 mos. Bowden suggests.

Brockett: Small biz grants going out soon, but it sounds like there's a gap between what we need and what is available.
Bowden: "My dept has completely exhausted .... I do not believe the city is in a position to close that gap."

"I am personally concerned about the PPE for biz as they reopen, and getting them guidance and signs and things they need for customers when they reopen, so I want to be thoughtful about asking for resources when we come to you."

Brockett: Maybe we can use CARES funding for rent relief. Idk when we'll get that, but thinking about it.

Brockett again: Are we thinking about how we can expedite ppl getting approvals and permits for retooling their physical space?

Brautigam: We're working on it (basically; it was a really long answer)

"We are trying really hard to use this crisis as a silver lining for improving our processes in planning and development services."

Bowden: Many businesses told us "they can not survive" without the in-commuting workforce.

"These aren't necessarily tourists coming from out of state. It's the in-commuters, working at an office, going out to lunch. You may see that ppl don't open right away bc everyone is not back at the office"

After a 5-min break, we'll be moving onto what I consider the most important topic of the evening: Budget projections for the city.

We're back. I'm going to be tweeting for future-you, bc I'm assuming not many of you are watching at this point.

Reminder: 2020 approved budget is $284.5 million (excluding utilities). Of that, sales and use tax is 48%, $137.7M

70% of revenues will be impacted by COVID, Cheryl Pattelli, CFO, says.

Retail sales taxes are 81% of sales/use tax.

Pattelli: "People are worried, ppl have lost their jobs and are worried about whether they'll have jobs in the future. That affects their spending."

Boulder brought in $141.9M in sales/use tax in 2019. Construction and biz use tax AND sales tax came in higher than expected, by about $4M.

Looking at March retail sales tax receipts: Down 5.43% YTD
Big drops in clothing stores (-25.29%) restaurants (-22.65%) home furnishings (-25.40%)

We don't view March as "indicative" of what April is going to look like, Pattelli says. The first few days were normal; then ppl were panic buying. Then things closed down.

Grocery stores were up 13.33% in March

Pattelli: Something else to remember, other than declining sales tax, is non-payment.

Through February, collected March 20, 92% of ppl filed for sales tax but 8% of those did not pay. $1.6M worth of taxes.

For March, 75% of filed. Of those, 8% have not paid = $1.4M in taxes

They're in the industries we'd expect, Pattelli says: Clothing stores, restaurants. "All those industries that are really suffering."

Zooming in on restaurants specifically, sales tax is down 22.65% for March vs. last year. That's more than $3 million.

Even with increase in grocery store sales, it will not be enough to cover decreases elsewhere, Pattelli says.

Another zoom-in (slide 58; guess I should share the presentation again: www-static.bouldercolorado.gov/docs/2C_Financ…

General retail is down 7.84% or $4.95M in tax

Grocery stores up 13.3%, as mentioned, which equates to $5.1M

"I think to some of the surrounding communities around us, our food stores aren't up as much as we thought" they might be, Pattelli says. We think that's bc we don't have big box stores other communities do.

Looking long-term and adjusting for inflation, Boulder has not grown its taxable sales in 20 years. When we take into account COVID losses, Pattelli says, we're below where we were 20 years ago.

City projecting a 1% decrease in property tax this year, bc people might not pay.

That's "conservative," Pattelli says.
BoCo Treasurer is not seeing slowdowns in payments, except for mobile homes and some commercial properties, Pattelli says.

Pattelli: Even during Great Recession, delinquency rate was 0.48%

Pattelli explaining why that is: Bc ppl + biz buy liens and then charge ridiculous interest rates to the owners to repay their taxes over three years.

Moving on to modeling for revenue decline. They've been updated with the following assumptions:
Shutdown period of 10 weeks
Retail sales tax decreases of 45%
Other revenue lines decreases between 10% and 100%

"This is something we've never seen before and we don't have much experience to lean on," Kara Skinner says. And we have very little data since March was a "mixed month" of normalcy, then distancing, then total shutdown.

"The future is still unknown."

There are three new models based on the type of recovery. The W, which Wobbekind/Lewandowski believe is most likely, shows a $23M decrease in retail sales tax, a $21.1M shortfall in the general fund and a $41.1M overall budget gap.

The 10-week shutdown underlying these assumptions is maybe a little conservative, Skinner says.

RE: grocery stores. City has them up 5% for the year, bc the March bump was an anomaly, but ppl will continue buying more food for home than going out to eat, Skinner explains.

This presentation is so important but damn it is hard to pay attention to budget stuff at the best of times. 10:30 p.m., five weeks into lockdown, after two previous financial presentations is decidedly not the best of times.

Skinner: "These numbes are shocking; they are dire. We want to be prepared if this is the reality. We could be wrong; we will be wrong. These numbers will not be THE numbers."

"It could be a better future than we are forecasting here but if it is not, this what we anticipate the impact could be."

(That was RE: the possible revenue impacts based on the speed of recovery)

A clarification: The revenue forecasts are being compared to what the 2020 budget was planned to be.

So what are other cities doing to balance budgets? In Colorado:
73%: Delay capital projects
66% Reduce operating expenses
65% Delay equipment purchases
53% Hiring freezes
28% Reduction of personnel hours or furloughs
10% Reduction of force (layoffs)

On average, local gov't in CO are anticipating general fund reductions of 21%, Skinner says. Smaller towns will have bigger hits.

Nationally, of municipalities with population 50,000 – 199,000
98% anticipate a revenue shortfall in 2020
63% anticipate having to cut public services
55% will have to furlough employees
36% will layoff employees

As you'll remember, Boulder furloughed 737 employees. Some may become layoffs; we'll know June 1.

With a hiring freeze and delayed projects, the city has saved $15.61M so far, $6.52M from the general fund

The first look we've gotten at projects that are being delayed
Capital projects:
Parking kiosk replacement program scaled back – no GF support
Enterprise CRM – Replacement of Inquire Boulder
Replace Police Incident command vehicle
Alpine-Balsam Pavilion interior

Operating projects:
Hill Garage financial/legal
Main Library North Building renovation feasibility study
Reduce employee training & development

Weaver q: The draft presentation you sent out had bigger deficits than what's here, by $1M. Why is it different?
Skinner: That was a mistake I made, double counting $1.6M. When we did a double-check, staff fixed it.

Pattelli on that project list: It's not a full list of everything we're delaying. They are just some examples.

Relatively, they're not saving much from projects: $3.42M or so. The most $$ saved is from not hiring and furloughing staff

Pattelli: We're looking at what programs should restart and when, through the lens of resilience (for instance, programs for vulnerable populations such as seniors) and the racial equity lens, as well as the revenue impact

Wallach: In terms of filling the gap between $15M in savings to date and $30-$40M we may need, how much of that gap can deferring capital expenditures projects make up?

Pattelli: We're working to get that info from departments. "When we first asked folks for this info, I don't think anybody really thought closures and Econ recovery would be as bad as what's being projected right now."

Some, we're under contract on, so we'll have to work though what obligations we have.

Wallach: When will we know?
Pattelli: June 9, our next planned update

Swetlik: When will we get an update about pay cuts for managers? You mentioned that when we did furloughs.

Brautigam: "We have taken a look at doing that. ... What we learned is that ... we have 3 bargaining units in the city. ... Contracts prevent us from lowering their wages."

Others are working more... "Non-union management employees are the only ones available whose pay we can reduce, so it would create and inequitable solutions."

Amount of $$ saved "would not be significant." And it would hurt morale.

Brautigam: "We made the decision not to do that."

Skinner is going over the categories that city spending will be funneled through: Essential, Important, Helpful and Amenity

Essential: Programs, services or facilities and supporting functions
Critical to health and safety
Could not be cut without a significant and immediate impact, or risk of impact, to the city’s or community’s basic operations and functioning ...

...Legally mandated by federal or state law or City Charter
Solely provided by the City of Boulder

Examples: sanitary sewer, dispatch, water distribution, emergency responders, payroll, snow removal

Important
Programs, services or facilities and supporting functions:
Valued by the community and created by the legislative action of the City Council
Could not be cut without some impact, or risk of impact, to the city’s or community’s basic operations and functioning

Examples: median maintenance, parks maintenance, library, code enforcement

Helpful
Programs, services or facilities and supporting functions:
Enhance programs or facilities in ways that advance desired community values
Could be cut without significant or immediate impact to the city’s basic operations and functioning

Examples: Library youth programs, rec centers, pools, art, rebate programs

Amenity
Programs, services or facilities and supporting functions:
May or may not be duplicative of services already being offered by another gov't agency or non-gov't org
May serve limited purposes or specialized interests
Could be more efficient if provided by NGO

Examples: golf course, makerspace, yoga classes, senior massage program, newsletter, financial support for events

When cuts are proposed, staff will include which categories the proposed cuts fall under

Yates: One month ago we were looking at $1 out of $10 as possible shortfall. Now we're looking at $1 of $7 that will no longer be available to us.

Weaver: About 15% cut that we're going to be looking at "That's pretty rough and it's going to be difficult."

"We are in a situation where we are going to have to do economic triage," Weaver says. "Every biz in the community and every household is likely to be doing some form of economic triage as well."

"It's no fun to participate in ... bc you end up ruling that things are not important ... but these are decisions we have to make."

Young: "Our community is very accustomed to having very high levels of services. Some are going to have to go away."

"It's a necessary exercise if we're going to get through this."

Young is presenting now on the work of the financial strategy committee, which is/was taking an overview of the budget. She, Yates and Joseph are on it.

The group is making recommendations:
- Apply essential, important, helpful, amenity classifications to entire budget process
- Develop two-year budget cycle to coincide with council terms
- Make committee permanent
- ID triggers for service cuts

Yates: "I don't think any of our recommendations would be any different if COVID hasn't come along. ... Our concerns are no longer hypothetical; they are real."

The subcommittee didn't have time to get to the racial equity lens bc of COVID, though.

Swetlik: I don't see opportunities for shifting revenue or raising more. Did you discuss that?

Yates: We did talk about that early on, "how our reliance on sales tax, a relatively volatile source, can de dangerous."

"How do we rebalance our over reliance on volatile sources and have a situation where revenue is less vulnerable."

Also, committee observed "an over-dedication of taxes which ... win at the ballot box (but) deprives the staff of nimbleness."

For example: The open space sales tax extension council rushed into November's ballot. Yates and Young were the two council members who wanted to leave some of that un-dedicated for the general fund. (They still voted for it, though.)

Pattelli: Our 2021 budget process is ongoing. I expect gaps in 2020 to be filled with one-time dollars, but we'll need to figure out ongoing cuts for 2021

I *JUST* noticed that the light behind Swetlik's couch turns different colors. It has been red every time I've seen it on screen; now it's like a teal.

Brockett: We typically rely on committees and take their recommendations. But I think when it comes to finances, I think the whole council should be the one making decisions.

Wallach agrees. Seems like Friend did, too.

Nagle, too.

Weaver wants to appoint tonight; Brockett doesn't

Yates also wants to wait on appointments.
"Let's peg a date" to do so.

Giggity.

Council votes unanimously to create the committee but will appoint members at a future meeting.

Weaver: "It is painful, but it's good to have accurate information and good projections" for the budget.

He gives the final words to Brautigam: We are anxious to get going again making decisions on our budget.

That's all for tonight. @threadreaderapp please unroll. Thank you!