Thread by @shayshinecastle

Time for our spring financial update. Presentation here: www-static.bouldercolorado.gov/docs/Financial…

As you may remember, Boulder cut $29M from its 2020 spending plan due to COVID. boulderbeat.news/2020/06/06/29-…

And the 2021 budget had a further $28.6M in reductions, including 70 jobs being cut. boulderbeat.news/2020/09/04/bou…

I'll just follow along with staff; I don't have much extra notes to add since I'm just seeing this info for the first time as well. Will add what I can from past updates/knowledge.

Boulder has been particularly hard-hit during COVID bc we lost the student population, most of our in-commuters (64,900 daily pre-COVID) and tourists, all of whom we rely on heavily.

Our budget is super sales tax-heavy. No sales = no tax.

For these reasons, plus our aging population (older ppl don't buy as much stuff) Boulder's also recovering a bit slower than the state and nation as the economy turns around.

Cheryl Pattelli, CFO: In fact, it ranks in the bottom quintile among MSAs (metropolitan statistical areas) in the U.S. in terms of employment recovery.

We're beating Greeley, tho, so.... yay? Everywhere else in CO is kicking our ass.

These job losses have hit low-wage workers the hardest, of course. (Here being defined as less than $50K per year)

If I ever managed to make $50K per year, I would feel like a freaking Rockefeller.

So sales and use tax = 47% of city revenue
Retail sales tax being 77% of THAT (sales/use tax as a whole)

Sales/use tax
2020- $133.2M
2019 - $140.1M

$6.9M or 4.9% decrease from 2019

General fund (which pays for cops, library, fire, etc., basically the city's only discretionary set of $$) is 43% sales tax

But sales tax also super important to the transportation fund, OSMP, parks and rec (they all have dedicated sales tax)

Restaurant sales tax down 35% from 2019 to 2020
Clothing sales tax down 27%

Pattelli: "Marijuana fared very well."

You don't say....

RE: sales tax: "What helped save us is the out of state or remote sales we had," Pattelli says. "We don't know to what extent this is new habits that will continue on."

That's apparent in looking at tax by location: Downtown tax down by 40%; 29th street by 39%; Pearl Street Mall specifically by 41%; CU area down by 46% (Uni Hill specifically down by 27%)

Dang, we're really flying through this. Trying to keep up.

2020 general fund expenditures exceeded revenue by ~$9.4M

Pattelli explaining where this came from: Some $$ set aside for specific projects (Alpine-Balsam, specifically) and then projects that were delayed.

And some emergency reserves, of course.

So we talk a lot about emergency reserves, but there are *other* reserves... money that is legally required to be set aside, or the city just does just bc of the way it budgets.

I feel like Jerd Smith at the Camera did a big story on this once....

Talking a bit about specific revenue sources, like hotel/Airbnb taxes, down 63.6% in 2020 compared to 2019

Sorry, 63.2%.
Still, yikers.

That amounts to about $5.5M, but lower hotel/Airbnb taxes also means lower visitation, which means lower retail sales tax.

Which is why accommodations taxes are a bellwether for tourism and taxes.

"How quickly we reacted to the situation to revise the budget" was a good move, Pattelli says. "I feel we're in a strong financial condition right now."

Q from Brockett: Did we actually increase our emergency reserves in 2020?
Yes, Kara Skinner answers (another finance person)

Wallach: So that $9M gap that we closed, all that came from other funds?
Yes, Pattelli answers.

Moving on to the 2021-2022 outlook

CU's econ folks have been helping us develop these

By "us" I mean the city. I mean, this is our tax $$ so.... Us.

On the national stage, there's a "huge pent-up demand for experiences and travel," Pattelli says, which should help Boulder, since lots of ppl travel here, typically.

City also pinning some hopes on return of CU students in the fall. Less certain is how many in-commuters will return as remote work continues.

"Over 70% of our folks who were commuting into Boulder were no longer commuting into Boulder," Pattelli says. "How will that change?"

Pattelli: "Also our commercial property. What kind of vacancies will we see," or change in property values (and therefore property tax).

"If the values go down, our revenue is going to go down."

Looking at the two months of 2021 sales tax data we have, restaurants down 25.39% year-over-year; clothing sales down 10%.

Overall, tho, sales/use tax up 3.55% from February 2020.

Again, looking at location data, online retail is really helping out: 45.69% increase from Feb. 2020 to Feb. 2021

"We have a lot of needs," Pattelli says. "We cut a lot in 2021."

We've moved onto expected expenditures.
An adjustment-to-base (coming in a few weeks) is $3M. This is like, shifting the budget from what was originally approved.

More info on what that adjustment includes:
Homeless encampments/services
Public safety overtime (police)
Police Record Management System
Insurance renewals
Building Performance Ordinance

Also, restoring some days for employees that were previously mandated furloughs (days without pay)

There's other stuff being added back to the 2021 budget:
About $12.2M worth of stuff.
Revenue will be $3.3M-$6M above original projections, tho, so we're looking at a $6-$9M deficit.

"It is significant and it speaks to the fact that we are not going to be able to restore services back to where they were (pre-COVID) in 2021," Pattelli says.

RE: the upcoming adjustment to base: "You don't have to approve all of it," Pattelli says, but I wanted to make you aware of new expenses.

Property tax keeps going up, tho: Boulder expecting an extra $2.7M in 2022 from property tax.

Nothing stops Boulder real estate, huh?

City also planning on resuming salary increases for staff in 2022. Those were paused (except for the police, which has a union with a previous contract) in 2021 bc of COVID cuts.

"Even tho we see a strong revenue growth, it would still put us in a deficit position if we were to restore where we were pre-pandemic," Pattelli says 2022 spending.

Pattelli rephrases the situation for 2021: We're bringing in $3-$6M more than we originally projected/budgeted for, but we have $12M more worth of stuff that we need to pay for.

Yates: What I'm not quite following is what the actual ask will be (for the adjustment to base).

So we can't restore city services to pre-pandemic levels, Pattelli says.
Yates: When might you feel comfortable restoring those?
Pattelli: We only have 2 months of '21 sales tax data, so it will be late summer b4 we know if we can or not.

Interim city manager Chris Meschuk: "We will not be able to restore everything we cut from the pandemic. We are going to have to make some hard decisions about which things come back now or wait a bit longer."

We can potentially bring back some services later this year, but we won't know that without more sales tax data. So that's a convo to revisit in late summer.

Hopefully you're all following this. I'll try and clear it up with a story for ya this week.

Pattelli: "There are some restorations in the adjustment to base. ... A few positions that folks are asking to come back earlier than planned."

Nice slide there about where some of these cuts were made. Lots from the library, of course, with 2 branches closed all year and services greatly reduced.

Brockett RE: adjustment to base and the homeless encampments/services: Is that assuming we OK what we're talking about later tonight?
Pattelli: It is exactly that, if you're greenlighting what you're talking about this evening.

Swetlik: Are we getting the full picture and accounting for federal funds? Can we apply any of that here?
Pattelli: We're still waiting on specifics (promised by May 10) but we are planning on it.

Devin Billingsley actually touching on that now. A lot we don't know about the American Rescue Plan yet, but Boulder should get $20.5 million.

We can use this money for:
"Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency"

"COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery"

"Premium pay for essential workers"

"Investments in water, sewer, and broadband infrastructure"

Hmmm.... premium pay for essential workers sounds like a good idea. Not entirely sure what that means; maybe Billingsley will answer that for me.

"Those are broadly defined," Billingsley says, "but not to the point we would prefer."

This $$ will come in two chunks. One "fairly soon," Billingsley says, and the other in 2022. Boulder has to spend it by the end of 2024.

Guidance from the feds:
"Focus on long-term value of investments and financial stability
One-time infusion should be used for one-time uses"

"These are one-time funds; we really feel they need to be allocated for one-time uses," Billingsley says.

Boulder currently developing a process for deciding where these funds will go.

They have some priorities. Money should:
Align with Sustainability + Resilience Framework

Apply Racial Equity Tool

Invest in impacted:
- Community members
- City employees
- Government services
- City infrastructure

Billingsley: "Our hope is to come back to you with a high-level funding recommendation by late May / June." Council will give input, then staff will make recommendations and hold a public hearing.

Swetlik: Does this council vote on the next year's budget before the new council is elected and seated?
Yes, is the answer.
Swetlikd: Is that normal?
Yes. As Carr says, it's in the charter that the budget has to be adopted by a certain point.

This has been one of Swetlik's pet peeves on council. He's not wrong: The budget ties the hands of what can really be done /changed. (Good and bad to that, of course)

Brockett on the federal funding: "Making up temporary shortfalls in revenue is something we could think of a short-term expense. ... We don't expect those (deficits) to last forever."

So maybe that $$ can "assist us in restoring some services," Brockett says.

The cuts to services "have real impacts to our community ... I was a little surprised to see we're adding to our reserves in a year" where we're cutting / continuing cuts to so many services, Brockett says.

Let's not be too conservative, Brockett cautions.

Young has thoughts on the "essential workers" priority for federal dollars.

"Would that be in the form of back pay? That seems to make sense? Would it be for only public employees?" It would be "helpful" to extend it to private sector workers as well.

Yes! Give the ppl money.... it helps so much. (I mean, not me. I'm doing fine.) But the other people.

By "it helps so much" I mean there's a lot of evidence to support direct cash transfer, as it's often called. It helps improve outcomes for kids in school, their health, reduces stress in families, etc. There's so. much. good.

Wallach: You're projecting a 5% increase in hotel/Airbnb tax in 2021. Are we seeing evidence of that coming back?

Kara Skinner, back again: I think the 5% is the Convention and Visitor's Bureau projection, which is 5% over what we budgeted for 2021. But we do anticipate some rebounding this year.

Wallach: "Do we expect that to happen in the summer months? It's hard to read the tea leaves after only a couple months. "
Skinner: It's more based upon industry conversations and projections, pre-bookings, etc. not our 2021 taxes so far.

Yates, the CBV liaison, adds: "I think the better word would be crawl back. It is a very slow and painful and gradual recovery that is expected to take many years, no months."

Yates: "Leisure travel seems to be gradually coming back. ... What is not coming back yet is business travel. We've seen very, very little growth in biz travel ... in booking conventions."

"It will take us well into the decade to get back to where we were in 2019," Yates says.

The man has issues (many) but damn he gives some good quotes.

Friend thanking finance staff: "I think you kept level heads when a lot of us were deer in the headlights."

Joseph also concerned about adding to our reserves instead of restoring services. And echoes Young's comments on giving $$ to essential workers.

"I've heard of paying utilities for community members, for instance. Idk what we can spend the $$ on, but I hope it is really to protect the community and ensure the equity we talk about so often on council," Joseph says.

That wraps this one.

@threadreaderapp please unroll. Thanks!