The City of Kerrville is cutting costs amid a projected multimillion dollar budget shortfall due to fallout from the COVID-19 pandemic.
Amy Dozier, the city’s chief financial officer, said Kerrville’s 2020 general operating fund — which fuels public safety departments, parks and street maintenance — was supposed to be $29 million.
“We're looking at about a $2.25 million shortfall related to revenues and the COVID-19 impact on (sales tax) revenues,” she said.
That shortfall leaves the operating fund at less than $27 million.
Sales tax is the primary revenue generator for the city, but other funding streams have dried up as well.
“One of them in particular is our hotel occupancy fund, which has a budget of about $1.5 million,” she said. “And we're expecting about a $600,000 revenue shortfall there.”
Revenue from the hotel occupancy tax fell 57% in April.
The city is projecting a total revenue loss of about $3 million for fiscal year 2020 alone. That timeframe runs until September. Between now and then, the city is looking to cut costs.
Kerrville also has an $8 million reserve fund to fall back on.
“If things are worse than what we're planning, that would be some place we could go,” she said. “But our first line of defense is going to be to cut expenses as much as possible to match the shortfall in revenues.”
Those cuts include the city’s recycling center, about a million dollars worth of street maintenance and paving, a hiring freeze on vacant positions outside of the public safety departments and pay cuts of up to 20% for city government executives.
She did say the city recently got some good news. City officials expected a 15% drop in collected sales taxes for March compared to last year. Sales tax revenues only dropped 8%. But April was the first full month of statewide shutdowns.
“And April will obviously have the full month of closures and full month of impact of COVID-19,” Dozier said. “So, we're expecting sharply lower sales there.”
Dozier said all revenue streams are taking a hit.
“Our Municipal Court has been closed so revenues are down there. Our library has been closed,” she said. “You know, they only generate a small amount of revenue, but there really are a ripple effect to many other revenue sources, not just sales tax and hotel occupancy tax.”
The city won’t know the full hit to April sales taxes until June. Dozier declined to comment on what other city expenses would be cut if the planned cuts and the $8 million reserve fund aren’t enough to make up for lost revenue.