PORT ANGELES — An early projection shows Port Angeles will lose about $1.4 million in revenue this year because of COVID-19, the City Council heard this week.
Despite the mid-year forecast, the council directed staff to continue programs to provide rental, mortgage and utility assistance to city residents who are struggling financially during the pandemic.
“It’s kind of an unfortunate situation we’re in because we have to balance the fiscal solvency of the city as a municipal corporation against the solvency of our residents and businesses,” Council member Lindsey Schromen-Wawrin said in a virtual meeting Tuesday.
“Now is our time to pay it forward and give back from reserves, again, recognizing that we need to stay solvent ourselves, and yet our solvency in the long run is going to depend on the health of our residents and our businesses in the city limit.”
A $1.4 million loss in revenue would represent a 1.1 percent reduction in the city’s $127 million total budget.
Given the unknown impacts of COVID-19 in the months ahead, Port Angeles Finance Director Sarina Carrizosa said the mid-year budget projection was “still very uncertain.”
The city began the year with $6.4 million in general fund reserves.
“The budget impacts of this pandemic could have been significantly worse had the City Council and staff had not taken that step several years ago to put the city in a better financial position, and it really ensured that we were successful in the case of an emergency,” Carrizosa said.
“Today, most of our fund balances have at least a minimum 25-percent (reserve to spending) requirement, so they’re able to absorb revenue shortfalls from emergency situations without decreasing service levels.”
The mid-year budget projection shows a $596,500 loss in revenue in the city’s $21.6 million general fund for day-to-day operations.
This includes a $100,000 loss in budgeted sales tax revenue, an $80,000 hit from unpaid property taxes and a $65,000 loss in budgeted utility taxes, Carrizosa said.
Permits and fees were projected to fall $148,600, or 32 percent, below budget, while parks and recreation revenues were expected to be $213,000, or 58 percent, under the 2020 budget.
“This was probably one of the areas that was impacted the most in the general fund because of the shutdown,” Carrizosa said of facility rentals and other park revenues.
On the spending side, the city has reduced travel and training costs, increased purchases for cleaning supplies and personal protective equipment for COVID-19 precautions and implemented a hiring freeze for non-public safety employees.
Port Angeles already has committed the $588,600 it received in federal Coronavirus Aid, Relief and Economic Security (CARES) Act funding for programs like rental and utility assistance for city residents.
CARES Act funding comes with a “significant amount of requirements” and cannot be used for budget shortfalls, Carrizosa said.
“While 2020 has been kind of a roller coaster, I’m sure, for the finance department, ’21 represents just as much uncertainty,” Council member Mike French said in the meeting.
French said the need for housing assistance would continue throughout the pandemic.
“The more we can do I think the better,” French said.
“That’s going to save us money in the long term because the consequences of homelessness are economically disastrous.”
Reporter Rob Ollikainen can be reached at [email protected].