Amid the pandemic, businesses have been forced to temporarily close or operate at reduced capacity. Travel for events has paused, and area hotels are vacant. As such, sales tax, hotel occupancy tax and other revenue are expected to take a significant hit by the end of FY 2019-20, said Susan Morgan, the city’s chief financial officer.
Morgan estimated the city’s general fund will see an $8.9 million-$10.3 million revenue deficit. She stressed that the numbers are still preliminary at this time.
With many local businesses shuttered or operating in a reduced capacity, Morgan estimates sales tax revenue will drop by $5 million-$6 million for the remainder of FY 2019-20. The projected impact to sales tax is equivalent to a 27% annual decline.
From March through June is historically the peak season for tourism in Round Rock. But this year, four hotels with a total of 608 rooms are currently closed. The ones that remain open are reporting occupancy rates less than half of normal, Morgan said.
The city’s tourism funds, which are used to pay for the city’s sports tourism and arts and culture efforts, could come up short by $3.4 million-$4 million by the end of FY 2019-20, Morgan said.
Per the city’s budget contingency plan, Morgan outlined steps to reduce expenditures to help offset projected losses.
General fund reductions include a $4.3 million cut to neighborhood street maintenance, a $1 million reduction across department operations and $1.3 million in savings by instituting a hiring freeze for 30 of 38 vacant positions.
With these types of reductions, Morgan said, the city would be able to balance its general fund budget without having to consider last-resort measures of laying off staff or dipping into the city’s reserve funds.
Another cost-saving measure Morgan proposed to City Council is placing a few capital projects on hold. Proposals include those projects that have not yet begun, such as Behrens Ranch Park. However, Morgan said she is not proposing a delay on bond-funded projects, such as the library or the trails or transportation improvement projects in the city’s five-year plan.