City prepares for budget hit

The Lubbock City Council at Citizens Tower for the first time on Tuesday. [MATT DOTRAY/A-J MEDIA]

Mayor Dan Pope began Tuesday’s city council work session by welcoming everyone to Citizens Tower.

The Lubbock City Council met Tuesday for the first meeting at Citizens Tower, the new 11-story City Hall location. Council members, as well as staff, began operating out of the newly renovated building several weeks ago, but Tuesday marked the first formal meeting.

City operations are now taking place at 1314 Ave. K.

City Manager Jarrett Atkinson updated the council on the city’s revenue projections. The city’s portion of the sales tax, the city’s largest revenue stream, is expected to take the biggest dip due to COVID-19 and the fact that businesses are not fully operating, and consumerism is way down.

Revenue in enterprise funds, such as water and wastewater, are also expected to be down.

Blu Kostelich, the city’s chief financial officer, says most projections don’t show the economy returning fully to normal until at least September. The city’s fiscal year begins October 1 of every year. Atkinson, Kostelich, department heads and other city leaders have begun crafting the proposed budget for fiscal year 2020-21 the city council will approve in September.

The dip in sales tax will not just impact this current budget, but Kostelich says it’ll impact the upcoming fiscal year budget as well. Kostelich says the proposed budget will be a base budget. He doubts there will be many large capital projects, or any project that’s non-essential, for that matter.

According to information from the state comptroller’s office, Lubbock's sales tax revenue was down about 5.5% in March in comparison to last year. Kostelich says the city expects the biggest impact to begin in April, adding sales tax could be down as much as 30%.

Atkinson says the city estimates a total loss of $5.66 million this fiscal year, primarily in the general fund. Atkinson says the city implemented what he called a Financial Response Plan, which includes three main changes: a “soft” hiring freeze, stopping all possible discretionary spending and freezing all appropriated cash-funded capital projects.

Atkinson said it’s a “soft” hiring freeze because it doesn’t include fire, police and public health departments.

Atkinson

The Lubbock City Council at Citizens Tower for the first time on Tuesday. [MATT DOTRAY/A-J MEDIA]

All total, Atkinson said the changes will equal about $7.1 million in cost savings, which will cover the expected loss in revenue of $5.66 million.

“That $5.6 million is a big number,” Atkinson told the city council on Tuesday. “That’s only the number necessary for mid-March through the end of September, which will close our fiscal year.”

Kostelich said the city is in better shape than it possible could be because sales taxes had been higher than projected before the pandemic. Part of what the pandemic is doing is offsetting the gains, he said.

Atkinson talked briefly about other city operations. He said last week Lubbock’s hotel occupancy rate was about half of what it was a year ago. The city’s hotel/motel occupancy revenue helps fund operations at the Lubbock Memorial Civic Center, Visit Lubbock and the Buddy Holly Center.

And traffic through the Lubbock Preston Smith International Airport was down 85% last week compared to last year, Atkinson said.