The city's assistant finance director, Chad Tustison, presented three models of varying recovery speeds at the Cedar Park City Council meeting May 14 that anticipate sales tax revenue drops between April and September.
The expected $21.5 million general fund revenue for fiscal year 2019-20 is projected to drop to between $17.1 million-$19.1 million.
"We will be impacted, but the duration and the depth of the impact is still playing out," Tustison said, as sales tax activity lags by about two months, so the impact of the March and April shutdowns will not show up for a while longer.
Sales tax revenue accounts for 30% of the city budget, and Tustison said the decrease in one-cent operations sales tax revenue could lead to between $1 million-$2.81 million in losses.
A slow nine-month recovery would have a 6.7% sales tax decrease and a loss of $1 million. A moderate recovery nine-month recovery would have an 11.2% sales tax decrease and a loss $1.69 million. A slower 12-month recovery would cause an 18.5% sales tax decrease and lose $2.81 million.
Other general fund losses come from drops in one-eighth-cent drainage sales tax, development fees, park fees, fines and forfeitures, beverage tax and interest income. Tustison said the city expects drops in development and in citation activity and a lower beverage tax, which accounts for these decreases.
The city has made changes to offset the losses, including capital project deferments, hiring freezes on non-public safety positions, line-item reductions and reductions based on offset revenue.
Tustison said the city budget is balanced as of today, and the city began the fiscal year in a strong financial position with healthy financial reserves, an “AA+” credit rating and other positive indicators.
City Financial Director Kent Meredith also presented finance update on the second quarter, which ended in March.
The effects of coronavirus are accounted in only one week of this report, Meredith said, but the restaurant and bars category of sales tax growth in 2020 is behind its 2019 equivalent.
Sales tax revenue is 1.2% over general fund budget predictions, and general fund expenditures are 2.1% less than budgeted for the second quarter.