Officials in Keller, Roanoke and Fort Worth weigh furloughs, hiring freeze options as revenues fall

City officials are searching for cost-saving measures to oset shortfalls in revenue due to the coronavirus pandemic. (Katherine Borey/Community Impact Newspaper)
City officials are searching for cost-saving measures to oset shortfalls in revenue due to the coronavirus pandemic. (Katherine Borey/Community Impact Newspaper)

City officials are searching for cost-saving measures to oset shortfalls in revenue due to the coronavirus pandemic. (Katherine Borey/Community Impact Newspaper)

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City officials are searching for cost-saving measures to oset shortfalls in revenue due to the coronavirus pandemic. (Katherine Borey/Community Impact Newspaper)
The cities of Keller, Roanoke and Fort Worth continue to search for cost-saving measures to offset the anticipated shortfalls in sales tax and other revenue due to the coronavirus pandemic.

In a joint statement May 8, Fort Worth Mayor Betsy Price joined 14 of her Texas counterparts in calling on Congress to provide “broad fiscal assistance” to state and local governments. Price said flexibility to distribute federal funding according to each city’s needs is critical.

“While Fort Worth is fortunate to be receiving an allocation from the Coronavirus Relief Fund, I feel it is critical that we support all cities during this crisis,” Price said.

The joint statement warned that budget cuts could affect a broad range of city services, such as building inspectors, public safety personnel, infrastructure projects and quality-of-life programs, including parks, libraries and museums.

Fort Worth officials estimate that sales tax revenue may fall short by up to $26 million in the second half of fiscal year 2019-20, from April 1 through Sept. 30. According to data from the state comptroller’s office, the city tallied more than $15.3 million in sales tax revenue in March 2019 but brought in just $14.3 million in March 2020.

“On the financial side, the COVID 19 pandemic will be impactful,” City Manager David Cooke said.

On average, Fort Worth sales tax revenue adds up to more than $170 million annually and helps fund other city entities, such as the Crime Control and Prevention District, which is expected to lose up to $12 million in funding during FY 2019-20, officials said. Fort Worth officials are also estimating a $14 million decrease in Culture and Tourism Fund revenue for FY 2020-21.

To help offset the drop in revenue, the city announced May 6 that 79 Fort Worth Public Events Department employees will be furloughed from May 16-July 31 as city officials project losses in the range of $15 million-$25 million from the cancellation of public events.

“At this time, this is the only department that is part of the furlough,” Cooke said.

Sign of relief

As government officials attempt to quantify the monetary effect of the COVID-19 pandemic on public funds, the latest property tax estimations may be the first sign of relief. The majority of revenue for city budgets each year comes from property taxes.

Preliminary 2020 property valuations from the Tarrant Appraisal District and Denton Central Appraisal District indicate reasonable growth in both market value and taxable values for real estate and manufactured homes in Keller, Roanoke and Fort Worth.

The city of Fort Worth saw the largest increase in taxable value, at 8.09%, according to the appraisal district, while the cities of Keller and Roanoke saw comparable increases. Taxable value increased 5.21% year over year in Roanoke and 4.5% year over year in Keller.

“From what I have generally heard from other cities, that is in line with what they are saying,” Keller Finance Director Aaron Rector. “As long as we can capture the new value portion of the taxes, we should be able to continue to craft a budget that helps provide some tax mitigation.”

Across Tarrant County, numbers from Tarrant Appraisal District indicate a taxable value increase of more than $10 billion, to $223.915 billion, from 2019 to 2020, a 7.08% increase year over year. Comparatively, taxable values increased 5.21% year over year in Denton County to $115.557 billion, according to Denton Central Appraisal District.

“The numbers are a year behind, so what you’re really seeing is values based on 2019 home sales,” Rector said. “From a property tax standpoint, the impact of COVID-19 is not happening right now.”

Impact of restaurant restrictions

Billed as the “Unique Dining Capital of Texas”—and home to hundreds of restaurants, bars music venues and retail stores on Oak Street—the city of Roanoke is feeling the brunt of COVID-19 restrictions.

According to the Texas Comptroller’s Office, among Keller, Roanoke and Fort Worth, the city of Roanoke saw the largest year-over-year decrease in March sales and use tax revenue at 21.08%. The city collected north of $1.8 million in sales and use tax revenue in March 2019 and less than $1.5 million during March 2020.

As city officials anticipate further sales tax decline in April due to a full month of COVID-19 restrictions, the city is considering a number of options to decrease spending, including a citywide hiring freeze instituted in March, Assistant City Manager Cody Petree said.

“Every vacant position is being reviewed on a case-by-case basis,” he said. “We have not officially furloughed any employees yet; however, due to the closure of many facilities, we have part-time and seasonal positions not working that are eligible for unemployment.”

The city has also instituted holds on all travel and training, Petree said. In addition, all large capital purchases approved for FY 2019-20 are delayed indefinitely, he said.

“Departments have been asked to cut expenses to the bare minimum without impacting the service to our citizens,” Petree said. “As we begin [planning] our FY 2020-21 budget, we have asked departments to submit a budget with no increases to their operating expenses.”

Preparing for lasting effects

As Gov. Greg Abbott reopens the state’s economy, Keller Mayor Pat McGrail said the city of Keller is preparing for lasting effects from the coronavirus pandemic.

Projections from city staff indicate a shortfall of $780,000 in sales tax revenue alone, he said. Additional decreases in revenue are anticipated due to a decline in mixed-beverage taxes, permit fees and court revenue.

“While we do not yet know all the long-term effects COVID-19 will have on Keller, city staff are already taking steps to adapt,” McGrail said. “[City staffers] are making adjustments to reflect the anticipated revenue loss as part of our FY 2020-21 budget prep.”

To help the city weather the storm, nonessential capital expenditures, smaller planned expenditures and new debt issuances are on hold, McGrail said. City staff has been temporarily reduced to full-time employees only, and City Manager Mark Hafner has instituted a hiring freeze.

The city has budgeted conservatively since the 2008 recession when staff was cut to 343 positions, officials said.

McGrail noted the many hardships that have hit the business community. Local businesses are “critical” to the city’s economy, McGrail said. They help improve residents’ quality of life through contributions from property taxes and sales taxes that support parks, road maintenance, police and fire departments, he said.

“Recent weeks have been a challenge for all of us, but we will adapt and overcome as we dig further into the budget process and continue work on the recovery of this amazing community,” McGrail said.