Despite some frustration with online meetings, disagreement on the issues and an occasional undeleted expletive, the Greenbelt City Council, at its final budget worksession on May 18, informally agreed upon how to address the $3.7 million hole in the proposed Fiscal Year 2021 (FY21) budget from the business closures resulting from the pandemic. The proposed revenue boost and expenditure cuts will be the subject of a public hearing on Tuesday, May 26. Council could tweak the budget further up until the budget is adopted on June 8. FY21 begins on July 1. In the first budget worksession on April 16, city staff presented council with a range of estimates of the impact of the coronavirus and proposed changes to fill the gap. Staff estimated that for the first half of FY21 revenues would be between $2.5 million and $3.7 million less than originally budgeted. A month later, there are at least as many uncertainties: When will restrictions on businesses and residents start to lift? How rapidly will businesses and citizens take advantage of the relaxed restrictions? Will the federal government provide any aid to state and local governments? Will the state change the formula used to distribute gas tax proceeds to local governments? Despite these remaining questions, the city is required by state law to adopt a balanced budget by June 8. Lost Revenue, FY20 Even before they started trimming the budget for the next fiscal year, council had to account for the revenue loss in the current fiscal year, which ends June 30. Council’s policy is to retain at least 10 percent of general fund expenditures as an unassigned reserve fund, preferably more. Prior to the pandemic, staff expected to be starting FY21 with a 17 percent reserve, leaving some room for adding things to the proposed budget. However, effects of the business closures and stay-at-home orders have reduced reserves to just 12.7 percent, limiting the effectiveness of Assistant City Manager David Moran’s and City Treasurer Laura Allen’s proposed FY21 drawdown to 12 percent by June 30, 2021. The realities leave only a 0.7 percent margin from which to draw. Moran walked council through two scenarios based, respectively, on the minimum and maximum estimates for the reduction in city revenues. Although Allen and Moran recommended working from the low end of the estimates (which would reduce revenues to $30.5 million), Councilmember Edward Putens urged using the even more conservative (greater revenue loss) scenario, which would reduce revenues to $29.3 million. His colleagues agreed.
Regardless of what council does now, the budget will be reviewed in January (and perhaps sooner) to see if further reductions in expenditures are needed or if some cuts can be restored. Future Revenues The biggest estimated revenue loss is from commercial property owners who are expected to request reductions in their assessed value that could reduce revenues by up to $1.5 million. Commercial property, unlike residential, is assessed based on the revenue generated by the property and the reduction can be retroactive and for up to three years. In the sole resident comment during the meeting, Bill Orleans renewed his call for the city to fight large abatement requests. The next largest revenue loss is recreation fees. With two seasons of classes cancelled, closure of the Aquatic & Fitness Center and uncertainty regarding other classes and programs, staff is estimating a loss of $677,700. Lower receipts from income tax, admissions and amusement taxes, hotel and motel taxes, highway user revenues, parking citations, red light and speed camera fines would reduce revenues by another $2.2 million. (The admissions and amusement tax is assessed on movie theaters, live performances and the Labor Day Festival. To date no decision has been made whether the July 4 fireworks or the Festival will be held.) At least three other councilmembers supported Councilmember Judith Davis’s proposal to raise the fine for parking violations to $50 from the current level of $40, the first change since 2006, generating an additional $15,000 in revenue and bringing the estimated FY21 revenues to $29.3 million. Expenditures On the expenditure side, updated information has produced $203,100 in savings due to lower than expected health insurance premiums and a lower than expected interest rate on the loan for the dam repairs.
In addition, a city grant application was not approved, freeing up $33,100 in matching funds otherwise required. Moran emphasized that all programs, projects and purchases the staff has been recommending have been dropped or will be deferred as needed. However, he said, these cuts are necessary to plug the hole in the budget. The measures discussed in April to reduce expenditures are still in play: cancellation of non-essential travel and training, keeping 10 positions vacant for all or part of the year and deferring equipment purchases and capital projects not supported by grants. In addition, staff pay increases would be deferred or eliminated. With these changes, expenditures are now estimated at $28.78 million. After these changes, estimated revenues are $480,000 greater than estimated expenditures. In addition to the measures above that appeared to have council support, Councilmember Emmett Jordan presented his ideas for additional actions including drawing the unassigned fund balance down to 11 percent and not filling the recreation director position, which has been vacant since December 2018. This would free up about $179,500, he calculated. He also pushed hard to repurpose the economic development revolving fund, which has not worked out the way council expected, and to use those funds to assist residents and businesses. He found little or no support for these proposals. Davis and Councilmember Leta Mach had also submitted budget proposals but they were not discussed. Mayor Colin Byrd thought it best to leave coronavirus relief to the state and federal governments saying that Greenbelt does not have the funds to help many people. Roberts agreed. Wish List In addition to Jordan’s proposal, staff provided council’s wish list of items mentioned during the budget review process as potential additions to the budget. Aside from Davis’s parking ticket proposal, none of these projects have yet made it into the budget, although there could be further changes before budget adoption. Proposals included a study of employee compensation ($150,000), funding conference registration fees ($20,000) and adding an information technology security audit ($10,000). Jordan also called for cutting the property tax rate by 2 percent. He pointed out that of the 150 municipalities in the Maryland Municipal League, Greenbelt has the 14th highest tax rate and the second or third highest in Prince George’s County. The list also included Mach’s proposal to use open space funds for capital projects which would require a city match of up to $100,000 while Councilmember Rodney Roberts proposed purchasing the Prince Georges Scrap property (no estimate available). Roberts argued that all the wish list items should be off the table. Councilmember Silke Pope agreed, saying that those are nice-to-have items, not essentials. It is more important to be able to retain all employees, she said. Putens’ views beyond the start of the call are not presented in this article. Unlike his colleagues participating through computer or tablet, Putens had called into the meeting. Twice he expressed anger at not being recognized to speak although none of his colleagues had apparently heard his request. The second time, after expressing anger at his perceived exclusion, he quit the call.
