As with every city in the state and nation, the City of Edmond is determining the net impact of the coronavirus on city revenue and its residents, City Manager Larry Stevens said on Thursday.
Oklahoma is the only state that is dependent on sale tax revenue. Stevens said the coronavirus will expose the unique predicament cities in the state have with an over reliance of sales tax.
“Oklahoma is the only state in the country where cities cannot use property tax for operations,” Stevens said. “So you can extrapolate that and basically say the current situation in all likelihood will hit Oklahoma cities harder than it does in cities in other parts of the country.”
The city has had a suggested balance of 10% in the general fund. Several years ago the city adopted a policy for a preferred minimum in unreserved funds.
“In the general fund, that is our reserve for emergencies and shortfalls,” Stevens said. “… for this current year when we prepared the budget, we estimated that to be 9.4%.”
Reserves for emergencies and shortfalls exist in many of its funds. The duration and significance of the emergency depends on whether those funds are tapped. The Capital Improvement Projects Advisory Board, and the Finance/Audit Committee would be consulted.
“There are a lot of variables that we don’t know about right now,” Stevens said.
The city does not currently have any hard data to project the outcome of the financial impact to the city due to COVID-19. There is a normal lag time of sales and use taxes.
“At nine months into the fiscal year we’re very healthy,” Stevens noted.
The last two weeks in January and the first two weeks in February reflect the state’s latest sales tax and use tax reimbursement check to the city, Stevens said. It will be some time in May before the city can see in hard numbers the economic impact to the city, he added.
Not only does the city have a 10% revenue balance in the general fund, but also it tries to maintain a 45-day operating reserve in its utility fund.
The city budgeted about $340 million for fiscal year 2020-21. Each year the revenue is divided into 50-60 funds, depending on whether internal service funds (ISF) are included.
ISF funds include office, human resources, and other areas that are financed by cost allocations from various departments.
“Basically it’s a full-cost allocation,” Stevens said.
PARTS OF CITY ECONOMY REMAIN STRONG
“We do expect some positive offset with the boost in grocery activity,” Stevens said. “We don’t know how much of an offset that will be, but we think those numbers are going up. And by all indications by what you hear in that industry, they’re hiring more people.
“Our grocery revenue should be going up at the same time our restaurants and other retail are taking major hits.”
Edmond has been blessed throughout the years with a healthy economy.
“We will get through this. There’s no doubt that we will get through this,” Stevens said.
City staff and the city council will make the best professional decisions they can, he continued.
The last time Edmond had a down year for fiscal revenue was during the recession of 2008-09. Internal mid-year adjustments were made without furloughs or layoffs. The city is not filling some open city positions at this point, Stevens said, until it more clearly sees the trajectory of the coronavirus.
“Even though there are a tremendous amount of unknowns right now, and the situation changes not only daily, but sometimes several times a day, we’ll get through this,” he said.