May 6, 2020 Update - Budget Edition

It has been an unusually quiet morning for me today.  Always nice to have a little time to get caught up and do a little strategic thinking rather than running from one meeting to another all day.  I enjoyed being back in the office yesterday, although I will be back working from home the rest of the week.  Like the rest of us who have been primarily working from home recently, I am trying to phase back in so I can be mostly back in the office by June 1.

Yesterday was a City Council day, which I look forward to every two weeks.  But it is weird to only interact digitally with Council members, staff and the public.  I know it may be a while before we can have Council meetings IRL, but I am anxious for the day that we can be back in the chambers for a Council meeting.

Today's Coronavirus Numbers

United States: 1,214,572 total cases;  71,982 fatalities
Utah:  5,595 total cases; 464 hospitalizations; 58 fatalities
Utah County:  1,210 total cases; 65 hospitalizations; 10 fatalities

The 2021 Budget

It has been a while since we have had a budget process that was as challenging as this one has been so far.  One of my first budgets in Provo was during the post 9-11 recession when we were making cuts and struggling with revenues.  About 6 years later, we were at the beginning of the Great Recession during which we had to make major cuts (including some layoffs) and wage freezes.  For two years, we struggled until the economy began to surge again, and for the following 9 years we had a very good period of economic growth in Provo.

But this year's process has been difficult because our current recession is not like any other before in my career. The economic difficulties came very swiftly and without warning.  We went from economic boom to uncertainty in a matter of days.  We now find ourselves with increasing unemployment, businesses only now beginning to come back after two months of closures, and low consumer confidence.  Trying to forecast the economy, and thus the city's revenue picture, out 18 months to plan a budget has been difficult.

There are some good things, however, on the horizon.  Utah's economic "bones" are strong and every indication is that we will weather the storm far better than other states.  Provo has a very stable and resilient sales tax base given that the majority of our retail sales are in groceries, home improvements, home goods, warehouse stores and online sales - areas that have been least impacted by the pandemic and will be among the erliest sectors to rebound.  So - in short - while there are storm clouds all around, we see some peeks of blue sky and sun nearby.

The budget for FY 2021, as recommended by the Mayor and the Administration - tries to reflect reality while also feeling cautiously optimistic about recovery.  So - some of the basics:

• We are pleased to have been able to preserve merit increases, the inflation adjustment to health insurance premiums, career series advancements and employee appreciation funds in the recommended budget.  This is great news for city staff.  We know that we are in this process together and it will take our best efforts together to weather the storm.  The one casualty of the declining budget has been the one-year elimination of the sick leave buyback program for 2020.  Sick leave balances will be retained (not scaled back) so employees will not sacrifice balances - we will just not be buying back the 48 hours of sick leave this year.  (More about this later)
  
• With the uncertainty of all cities and counties in the state this year, we determined that the market study adjustments would be postponed this year as it is really hard to identify the market value of positions when many other cities are doing furloughs and layoffs.  We expect to undertake the market study next year and make adjustments as needed.
  
• The budget eliminates funding for one year for 6 existing positions in the General Fund - 5 of which are currently vacant and one was eliminated due to declining workload.
  
• We have imposed a soft hiring freeze, requiring all vacant full-time positions to go through a formal review process with approval by the Mayor prior to refilling the position.
  
• The proposed budget adds two additional positions in the general fund - one additional school resource officer that is being funded 50% by the Provo School District, and one position at the airport that was recommended in a recent FAA review and audit of airport operations.
  
• We have included additional funding this year for vehicle purchases to fully implement the recommendations of the city's fleet committee.
  
• We eliminated contributions from the city's operating budget to capital equipment replacement reserves at our city facilities, given that we have balances in those reserves and can afford a one-year delay in building those funds back up.
  
• Finally, for the first time anyone in Provo can remember, we have dipped into our "rainy day fund" to supplement the general fund to minimize the impact of the pandemic on our operations.
  
• If revenues increase faster than we expect, or if economy measures during the year end up saving substantially in the city's accounts, we are committed to taking another look at the sick leave buy back later in the fiscal year if it is possible.

We know that some of this is hard, but we hope we have struck the balance between maintaining good levels of quality service to our residents, taking care of our employees by not freezing wages and not requiring significant layoffs, and respecting the needs of our taxpayers, many of whom are unemployed at the current time.  We look forward to working with the Municipal Council through their process to review the budget for the next couple of months before it takes effect in July.

The recommended budget is posted on the city website here.  If you have questions or comments, please feel free to leave them below or reach out to the Finance staff.

Provo Social Media

The Mayor's Day

Today, Mayor Kaufusi:

• Met with Police Chief Rich Ferguson
• Met with Council Chair George Handley
• Met with Assistant CAO Dixon Holmes
• Met with library staff members and other regarding historical documents preserved by the library
• Met with UDOT Region 3 officials on current transportation projects

Fun Stuff

Ever wish you had a glimpse into the future?

Thanks for reading this long post.  I appreciate you and all you are doing to make life in our community better!

Wayne