HUDSON — Governments big and small are facing budget shortfalls as COVID-19 shutdowns drag on, especially in tourism-driven economies such as Hudson’s.
City Treasurer Heather Campbell gave a year-to-date comparison for the first four months of 2019 and 2020 to the Finance Committee on Tuesday. The treasurer’s report can be found on the city’s website.
The city has seen a 33% drop in parking revenues compared to this time last year. Including on- and off-street parking, the Front Street municipal lot, parking and other permits, and parking tickets, there is an $85,912 loss based on 2019 numbers.
Earlier this year, the Common Council voted to raise the meter rate on Warren Street from 25 cents per hour to 50 cents per hour. The Common Council voted Tuesday on the same increase to all on-street parking meters.
Mayor Kamal Johnson suspended parking meters throughout the city, except at the Front Street municipal lot, on March 18. Meters will resume collecting fees June 1.
“You can see year-to-date, versus a year ago, we are basically a third behind in revenue,” Campbell said.
While there has been a 43% decline in building and plumbing permits, Common Council President Thomas DePietro said that with permits on hold, there may be a buildup of applications that would bring in closer to normal revenue when they are allowed to resume.
“Since it’s down so low, there’s a chance that it’ll recover, maybe not too obviously to what we’re hoping and originally planned for, but it could recover significantly, given a backup of permits,” DePietro said.
Campbell outlined two projected non-property tax budget estimates, a high-impact and a low-impact projection, for the remainder of the year.
Overall, the city’s losses in the low-impact scenario are estimated between 10% and 15%, or $613,296 to $993,481.
Using the high-impact projections, the average is estimated between a 16% and 23% loss, or $997,841 and $1.45 million.
DePietro reminded the committee and members of the public that these are estimates, not science.
The report included charts outlining revenues for parking, lodging taxes, building and plumbing permits and sales tax.
Although she used the same growth rate month-to-month in the projections, Campbell said it is obvious they won’t all recover in the exact same time or way.
Campbell projected 105% and 110% revenues for November and December.
“We were looking at revenue increases at some point in time,” Campbell said of the winter months’ projections.
If the low-impact projected revenues for the remainder of the year are accurate, the city can expect to lose $233,905 on parking, a 29% decrease from 2019. The high-impact scenario estimates a shortfall of over $338,000.
“I would say this is not the best-case scenario. I think it’s a potentially realistic scenario,” Campbell said. “The best case is people take June to figure it all out and in July everything’s back to normal. I think it’s unlikely, personally.”
The lodging tax, the majority of which is collected quarterly, could be impacted by hotel and short-term rental closures in the first and second quarters.
“Of course the major payers, the hotels, have been closed — not The Wick though, The Wick has been active,” DePietro said.
The low-impact projection shows a shortfall of approximately $78,000 in lodging-tax revenue compared to 2019, while the high-impact estimate is over $155,000 lower.
The state distributes sales-tax revenue quarterly to the county, which it then distributes to the municipalities.
Columbia County Treasurer P.J. Keeler provided a high and low estimate on sales-tax projections, which Campbell said were optimistic.
The first quarter, while higher than last year, was not as high as anticipated based on initial budget projections for this year.
Campbell said the most disturbing factor was the 23% drop in sales-tax revenue for March since businesses were still open as usual for the first half of the month.
“If March was that bad with only half a month, then April and May will be a greater drop just because they’ve basically been closed those entire months,” Campbell said.
Sales tax revenue is estimated to be $264,815 lower than last year in the low-impact projection and $447,296 in the high-impact projection.
Of the city’s $11.7 million budget, 55.4%, or $6.49 million, is non-property tax revenue.
Campbell expects revenue streams such as PILOT payments and Aid and Incentives for Municipalities payments from the state to remain steady.
Even without a pandemic, there is strain on the city’s finances.
The city’s unassigned fund balance fell by more than $436,000 from 2018 to 2019.
“That’s obviously not great, wouldn’t be great if we were going into a normal year, but especially not great now going into the coronavirus world of finance,” Campbell said.
The unassigned fund balance is 29% of the city’s annual adopted budget. In 2019, it fell to 24.3%.
“[It] does technically bring us below what our current fund balance policy calls for, which is a minimum of 25%,” Campbell said.
She confirmed that if the city doesn’t get outside assistance, Hudson will have to dip into the fund balance, which the high-impact projections would reduce to about 12%.
“The fund balance is partly for an emergency like this, I imagine,” DePietro said.
Johnson has asked city departments to plan to make cuts to their budgets of between 5% and 10%.
Campbell reminded the committee that departmental expenses are less than half of the city’s expenses, noting that the city has some “very lean” departments.
DePietro said the projections show the city can endure this for a while if needed.
The city took a big hit in 2019 when everything was fine, Campbell said.
“We continued to increase expenditures at a rate that far outpaces our ability to increase revenues, and it’s eventually going to catch up with us,” Campbell said.
Abby Hoover is a reporter for the Register-Star. Contact her at firstname.lastname@example.org.