Vancouver’s financial situation during COVID-19 looks rosier than initially predicted, though the city is far from out of the woods.
Sales tax receipts came back stronger than anticipated, and property tax returns so far seem unscathed by the pandemic, said Natasha Ramras, Vancouver’s chief financial officer. The city is still facing a major hole — and future variables, like how long the current recession lasts, could drive it deeper still. But the preliminary prediction issued in April, which planned for up to $60 million in lost revenue this year, appears bleaker than the reality.
“Definitely we are looking much, much better for 2020 than originally anticipated,” Ramras said. “Sales tax has seen a reduction for sure, but people are still spending money. People haven’t pulled back as much as we thought they would.”
She plans to have a clearer picture of the city’s financial situation by the end of September.
Federal aid likely played a big role in avoiding the precipitous drop in sales tax revenue, she said. The $1,200 issued in direct funds to individuals as part of March’s CARES Act appears to have temporarily boosted spending.
Additionally, she said, the extra weekly $600 issued by the Washington Employment Security Department on top of normal unemployment benefits helped keep consumers above water. That benefit expired at the end of July.
Sales tax receipts have a two-month lag. Ramras emphasized that she is issuing predictions based only on the information at hand, which is limited.
“We have seen April and May right now,” she said. “We haven’t seen June and July, but I have no reason to believe it’s dramatically different.”
“I expect August and September to be stable, kind of comparable to what we’ve seen, and then it will probably depend on what the federal government does and what choices people are going to make based on their employment situation.”
CARES Act funds
Under another stipulation of the CARES Act, Vancouver received $5.56 million in federal funds to help reimburse the costs of dealing with the pandemic.
There are a fairly narrow set of parameters that guide how that money can be spent — it needs to go toward coronavirus-specific expenses. It’s not for weathering the broader damage done to the city’s general fund as a result of the recession.
In Vancouver, Ramras said, the money has gone toward reimbursing first responders for coronavirus-related calls, where a “high likelihood” exists that somebody has been infected. The funds have also helped to purchase personal protective equipment, increase sanitation at city facilities, and purchase technology to help administrative staff switch to working from home.
Another large portion of the money will go toward reworking City Hall so that the open floor plan is conducive to social distancing, though Ramras said she’s not sure yet what that will cost.
“So far, it looks like we have more expenses than the grant dollars would cover,” Ramras said.
On Monday, Mayor Anne McEnerny-Ogle joined a trio of Washington mayors who urged Sen. Patty Murray to prioritize more funding for cities.
While the initial CARES Act was hugely helpful, McEnerny-Ogle said, the rigid guidelines on how it could be spent made it difficult for cities to respond efficiently, especially among smaller municipalities.
“Over those past few months, we’ve had to cope with a lack of flexibility in how we could spend those funds. There was that little caveat in the statute that prevented the cities (from using) the money to mitigate budget shortfalls,” McEnerny-Ogle said.
The mayor added that Vancouver leaders are making some “very difficult decisions” right now that will impact basic city services, including mandatory furloughs for most of the staff.
“We’re trying to fight the disease, coordinate all of our local responses — and we’re devoting significant resources to help keep people safe — and at the same time, as economies are shutting down, we’re experiencing a precipitous decline in tax revenue. All of this is decimating our budget.”
Murray said that she supports the Heroes Act, which passed the House of Representatives in May but has yet to be taken up by the Senate. The act would issue another round of funding to local governments, including $11.2 billion in total for cities in Washington.
“Now is not the time for Congress to shirk its duties,” Murray said. “All of us are relying on the people our state and local governments employ.”
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