“Like so many others across the world, we were really excited to begin a new year and a new decade in January,” Assistant City Manager Jennifer May said during a July 21 budget proposal presentation. “We were just beginning to focus on building upon the success of the prior year's budget in February, and then, everything changed.”
With the sudden change in the economy that followed stay-at-home orders and shutdowns in response to the coronavirus pandemic, Sugar Land staff began examining major revenue sources, such as sales tax, mixed beverage taxes, Sugar Land Regional Airport revenue, tourism funds and hotel occupancy taxes, among others, May said.
“Overall, we are currently estimating a fiscal year [2020-21] revenue impact of nearly $3 million in the general fund, which is, thankfully, on the lower end of our initial worst-case scenario,” May said. “With that said, however, the figure really understates the true impact of COVID-19 on this year's budget, as the impact of our resiliency measures really offsets the total impact that we're seeing.”
Prior to challenges associated with the coronavirus, Sugar Land implemented some resiliency efforts, such as budgeting for only recurring sales tax growth and shifting property tax revenues to support “Sugar Land Way” initiatives that are meant to benefit residents and businesses within the city, May said.
“Without a doubt, those resiliency efforts have proven critical to everything, from allowing us to respond to legislation with a negative financial impact, to ending [FY 2019-20] more than $4 million better than budgeted in the general fund. And, of course, they have certainly prepared us for emergencies like COVID-19. Unfortunately, we are not immune from the impacts,” May said.
In sales tax revenue alone, the city is projecting a roughly $4 million decline year over year, May said.
“Additionally, that figure does not include or reflect any of the impacts that we are seeing in tourism or airport or even economic development corporations. And all of the impacts will continue into [FY 2020-21],” May said.
In planning for the general fund budget, Finance Director Jennifer Brown said she and her staff recognized there would be consequences from COVID-19.
The general fund provides for government services, such as public safety, parks, public works and neighborhood services, Brown said. The primary funds for these services come from property tax revenue and sales tax revenue, she said.
“For sales tax, we are estimating that we're going to be continuing to see the impacts of this volatile revenue stream through the middle of next year in the scenario that we've built the budget around,” Brown said.
Overall, the FY 2020-21 proposed budget for Sugar Land is $254.37 million. The proposed property tax rate for FY 2020-21 will be discussed Aug. 18, and the budget and tax rate are both set to be approved Sept. 15.
For more information on the proposed budget and budget planning, visit www.sugarlandtx.gov/100/finance.