Concord predicts steep revenue shortfall, mostly due to COVID

CONCORD — Concord officials believe the city’s revenue in this fiscal year will be $10 million less than projected, largely due to the coronavirus pandemic’s economic impacts.

The city released a budget update last week detailing a rocky financial outlook. A new sales tax that went into effect on April 1 and federal relief dollars arriving in the coming months will not offset the $10 million shortfall from an original projection of $109.5 million in revenue this fiscal year.

In the previous fiscal year, Concord posted $7 million less revenue than it projected, prompting the City Council to reduce spending and eliminate 36 jobs. But the city has struggled even more financially this fiscal year, especially after a winter COVID-19 surge forced a second statewide stay-home order.

Much of the shortfall has stemmed from Concord’s sales tax revenue, which sharply declined when most of the local economy came to a halt several times in 2020. Revenue from a hotel tax also suffered greatly, and the city was unable to draw any money from local parks programs by renting out community centers.

The new 1 percent sales tax, Measure V, replaces an existing half-cent tax and is expected to generate an additional $13 million annually (on top of what the existing tax already produced). But this fiscal year, the city expects to receive only about $3 million from the sales tax increase.

Not included in current projections is relief money through the American Rescue Plan, which President Joe Biden signed into law last month. City officials expect the plan to deliver $26 million to Concord over the next two years.

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However, it remains unclear exactly how cities will be allowed to spend that money. The U.S. Department of the Treasury is still determining where relief dollars can be applied. And after the federal guidance comes down, the City Council and staff will need to figure out a spending plan, which they likely won’t be able to complete before the end of the fiscal year.

“We’re still waiting for some of the rules,” said Guy Bjerke, Concord’s economic development director, in an interview. “It was touted as being able to backfill certain areas of losses, but some of it will continue to have COVID-19 requirements where you have to demonstrate that you use the money” to offset pandemic-related losses.

The city’s current game plan is to put most of the revenue generated from Measure V and federal relief toward one-time capital improvement projects, including roof maintenance at the Concord Civic Center and HVAC air filters for the police department.

Concord received taxes from hotels like the Crowne Plaza on John Glenn Drive, but the coronavirus pandemic has throttled that stream of revenue. (Google Street View) Google Maps

Last week, the city also approved a $1 million relief program for small businesses that have incurred losses during the pandemic.

Still, the steep financial hit from COVID-19 has not been as heavy as Karan Reid, the city’s director of finance, expected when the pandemic began taking hold of the country just …read more

Source:: The Mercury News – Entertainment

      

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