Mukilteo Beacon - Your Hometown News Source

By David Pan 

City still expecting to take a hit on revenues due to coronavirus crisis

 
Series: Coronavirus | Story 115

Last updated 5/13/2020 at 11:45am



The City of Mukilteo is still waiting on the latest numbers from the state on sales tax in order to determine the exact nature of revenue shortfalls it will be facing due to the COVID-19 pandemic.

“There’s a lot of uncertainty right now, not just with the scope of the public health emergency, but also what that means for our revenues,” Mukilteo Finance Director Michelle Meyer said during an update at the Monday, May 4, City Council meeting.

Meyer reiterated that the primary impact to the City is going to be reduced revenues rather than increases in unbudgeted expenditures.

Meyer noted that the City has a longtime “gap closing policy” based on general fund expenditures over the general fund revenue. Gap focuses only on the general fund, but Meyer added that many of the City’s operational funds are dependent on the general fund.

The three levels are:

Watch – Gap exceeds 1%, but less than 3% of general fund expenditures

Moderate – Gap exceeds 3%, but less than 5% of general fund expenditures

Severe – Gap exceeds 5% of general fund expenditures

Based on information from 10 days ago, Meyer said that the City is facing a $133,000 gap, which would be at the watch level.

“But as soon as we have some additional revenue come through in a few months, that can change pretty quickly,” she said.

The City is projecting a 10% reduction in sales tax, criminal justice tax, business licensing and admission tax revenues.

In response to a question from Councilmember Bob Champion, Meyer said an additional 10% reduction in sales tax (20% overall) would put the City at the moderate level.

“The sales tax for us is the hugest variable right now because there’s a two-month delay in reporting, and that information goes directly to the state and the state gives it to us,” Meyer said.

Steps the City already are taking include reducing the transfers to reserve funds for this year and keeping the money in the operating fund. Many open positions are being held through July. Travel, supplies, services and training have been reduced.

The consensus of several councilmembers was to recommend that the City shift to the moderate level rather than watch level.

“I would feel a lot better going for the moderate rather than the watch and be pleasantly surprised if we don’t need that,” Councilmember Joe Marine said. “I think we need to be a little more proactive and really tighten the belt and hope for the best, but plan for the worst.”

Council President Richard Emery and Council Vice President Sarah Kneller echoed Marine’s preference for the moderate level.

“I agree that (we should be at) moderate as a minimum,” Champion added. “I think we should actually be highly proactive and look at it as severe.”

Meyer noted that sales tax revenues from February were strong.

“The first quarter of this year’s sales tax receipts are actually higher than the first quarter last year,” Meyer said.

But the impact of COVID-19 is expected to be seen in the April and May numbers, she added.

 
 

Reader Comments
(1)

charlspa writes:

Finance Director misunderstands how the Council's GAP Policy works as do the Councilmembers. Estimated GAP she provided to the Council was about $800,000. more than 5% of Budget.$800,000 is the GAP, the Severe category. Once GAP is identified, Mayor is to provide a plan for Council to consider. Eliminating payment to the Equipment and Facilities Funds is one recommendation she made. Council hasn't decided what to do so GAP remains $800,000. There are other options. Most need Council action.

 
 
 

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