Raleigh City Leaders Discuss City Budget Deficits, Impact on City Operations
Across the nation, major cities have found themselves blowing through reserve funds like never before. The novel coronavirus (COVID-19) is fiscally impacting hundreds of cities, with city managers forced to revisit their budget projections.
With colleges and universities in Raleigh, North Carolina transitioning partially or completely to online learning, the city’s sales tax revenue has especially plummeted in the area.
“We have three major universities in the area. The students being present and spending money in the region, particularly Wake County, is something that contributes to our economy quite a bit,” Bret Martin, the Transit Program Manager for Wake County, told Scriberr News.
In addition to schools not going back to in-person instruction, North Carolina is still in phase two of their reopening plan, which limits the opening of establishments such as gyms and fitness places, bars, and entertainment venues that charge sales tax.
Before COVID-19 struck the state, the city of Raleigh forecasted a 3% to 4% growth in sales tax collection through 2030.
“We have revisited our forecast,” Martin said. “And through the next 10 years through 2030, we have forecasted between $107 million and $240 million in reductions in sales tax collections below what we originally had forecasted.”
According to the National Conference of State Legislatures, North Carolina was $1.2 billion––or 31.5%––below the expected revenue in April 2020. With such a deficit from expected revenue, new programs have been put on hold, positions within the city are not being filled, and public transportation has limited its services to weekend levels of service throughout the week.
“When you have less revenue that means you have to make cuts to expenditures as well,” Martin said.
Raleigh allowed projects from prior fiscal years to continue but did not allocate additional funds into new projects that would begin this fiscal year. Those projects were put into a queue until the data they receive indicates they can afford to fund them.
The city is also freezing new hires during this time. While layoffs are not happening, positions that would normally be filled once an employee leaves are remaining vacant.
But Martin talked about a silver lining amid the budget deficit: the real estate market.
“The real estate market in North Carolina is not in bad shape at all,” Martin said. “The home values are at a value where the taxing ability of the cities and county is such that they are not really taking a hit.”
The city is also saving money by not running their public pool services and summer camp programs because they cannot safely run them with social distancing in place. While these public services are not revenue drivers, they serve the community through the Parks and Recreation department.
Sabrina Wallace of Wake County has two kids under the age of 12 and depends on the Parks department’s summer and track-out camps, along with their public pools.
“I cannot speak much about the other programs but camp. It is just a really big impact financially, especially with two kids,” said Wallace.