COVID - 19: Decreased Budgets and Deferred Timelines

FirmoGraphs tracks and analyzes weekly and monthly meeting minutes from more than 1000 municipal and utility boards nationwide. One current application of this research, and our related natural language processing tools, is to look at COVID-related discussions about U.S. municipal infrastructure.

As the COVID-19 crisis persists, cities and utilities respond to the challenges as they undertake fiscal difficulties throughout the pandemic. In spite of financial ups and downs due to COVID-19, everyone is trying to survive the storm by curbing new hiring and continuously looking for ways to save money.

In this week's blog, we look at how organizations across the country are finding solutions in the face of the pandemic.

City & County of San Francisco Port Commission

At the San Francisco Port Commission's June meeting, the Finance and Administration Division requested re-approval of the biennial operating and capital budgets for 2021 and 2022. Although it was already approved in February, the budget demanded updates due to the COVID-19 crisis. 

In the first year of the budget, the Division reported they are expecting revenues to be 50% lower than anticipated and compared it to the great recession from 2008 to 2010. The Division proposed to reduce operating and capital expenses and use their substantial fund balance to their advantage. Also, the Division suggested going through an exercise of looking at prior capital appropriations that are unspent and defunding some of the projects, and in that way, ending two years with around $14 million left in the fund balance. 

The Division proposed some other strategies: cuts to contractual services, materials, and supplies, cuts to IT strategic plans, and reducing future capital appropriations previously proposed in February. Additionally, the Division suggested reducing future capital appropriations they had previously submitted in February to the most critical projects.

The last component of the strategy was to defund prior allocations to capital projects that are currently unspent. The Port now has around $80 million in unspent capital appropriations, which  the staff will go through to set priorities. They will then identify roughly $15 million in savings and re-appropriate those funds.

The Valley Metro Regional Public Transportation Authority (RPTA), Arizona

In June, the Audit and Finance Subcommittee held a meeting where they discussed Valley Metro RPTA FY 2021 proposed operating and capital budget and five-year operating forecast and capital program for FY21 through FY25. 

The Valley Metro RPTA combined operating, and capital budget for FY 2021 is $335.1 million. The budget involves $82.0 million of expenses for light rail/high capacity transit capital. It was developed in compliance with the Board of Directors’ adopted budget, financial, and Transit Life Cycle Program (TLCP) policies.

The Subcommittee announced they had made some reductions to the operating budget in administration areas and deferred some fleet purchases for service expansion due to the economic impacts of COVID-19. The updated Proposed budget also incorporates Federal Funding from the CARES Act and more conservative estimates for Proposition 400 funding and fares. The CARES Act funds will mainly be used in FY21, with a minimal left to support service in FY22 and beyond. Starting in June, Valley Metro will work through the Service Planning Working Group to figure out options for long term service changes to approach decreased revenues. 

The total operating budget of $196.5 million, which includes pass-throughs, represents an $8.1 million decrease from the previous year’s $204.5 million operating budget. The total capital budget of $138.7 million, including pass-throughs, represents a $29.8 million, or 18%, decrease from the previous year’s capital budget of $168.4 million. The CARES Act funding reduces the regional and local commitments for operations funding by $49.8 million, including reductions of $24.6 million from PTF and $25.2 million from local sources.

The budget and revenues for the first quarter of FY21 will be evaluated with the Financial Working Group and AFS in October.

City of Raleigh, NC

Across the country in Raleigh, North Carolina, discussions around budget amendments are also occurring.

On June 16, 2020, the City Council of the City of Raleigh held a meeting where the Finance Department sought approval for a budget amendment for $3.8 million to move incurred and anticipated costs about the City's COVID-19 response. The budget amendment would allow staff to consolidate city-wide costs from Department operating funds to the Disaster Recovery Fund to allow for the ease of tracking, reporting, and reimbursement management through FEMA or other reimbursement opportunities. 

Also, since the impacts of COVID-19 began, City and County staff have worked with hospitality stakeholders to monitor the revenues and plan for budget impacts. As a result of these impacts, the Wake Board of Commissioners and the Raleigh City Council were requested to approve an amendment to the Revised Interlocal Agreement. The revision reflects adjusted revenue projections, associated expenditure reductions, and revised future allocations. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act awarded the City of Raleigh, among other things, $5.7 million to cover operating expenses and any net deficit in FY21. This funding will be brought back as a mid-year budget amendment based on evolving needs. It also got rewarded $3.8 million to be held in reserve or to cover FY22 funding needs or net deficit.

What Next?

FirmoGraphs will continue to monitor unplanned budget and project changes for your utility and municipal customers. These insights can help you pivot your strategic business planning during and after the fallout from Covid-19 financial impacts. FirmoGraphs will continue to employ our Power Search tool and business analytics process, to help our partners optimize their business position with actionable intelligence.

Set a meeting with us to learn more about the FirmoGraphs Power Search tool and how you can optimize your business position with actionable intelligence.