Augusta ponders budgeting despite coronavirus pandemic

AUGUSTA — City administrators plan to have a budget proposal for councilors to consider by the end of the month, in hopes they could act on it by the start of next fiscal year July 1, despite not being likely to know by then how severely city finances will be impacted by the worldwide coronavirus pandemic.

What officials do know is its impact won’t be good, with public safety expenses and requests for financial assistance from residents on the rise, and state revenue sharing expected to drop.

The city budget would normally have been delivered to councilors by March 31, but City Manager William Bridgeo told them Thursday that was delayed for “the same reason a lot of other municipalities are doing the same thing, which is the significant uncertainty as to what this pandemic we’re in the middle of is going to mean to the local economy, and on the city’s ability to project revenues and expenditures for our fiscal year.”

Bridgeo said for now the city is fine, in part because it has a healthy fund balance of about $8.4 million, according to the most recently available city budget information, which would be more than 10% of the city’s $65.2 million current year budget.

The city charter, according to Ralph St. Pierre, finance director and assistant city manager, requires the city to keep at least 5% of the annual budget amount in fund balance, and recommends keeping just a little more than 8% in the fund, which can be used to cover unanticipated expenses.

Longer term, the city’s worries related to the financial impact of the coronavirus could include a loss in property taxes if some residents who lost their jobs fall behind, a reduction in excise taxes if residents and businesses in the city buy fewer vehicles, and the loss of state revenue sharing, a formula the state uses to share sales, meals, lodging and other tax revenues with Maine’s municipalities.

Bridgeo said how long the virus’s impact lasts is key.

“If the pandemic is over in a month or so and in another couple of months life starts to become more normal and business activity picks up and people are readily able to pay their taxes and fees and so forth, that’s one thing,” he said. “If this extends into the fall, then I think we’re looking at an entirely different set of circumstances.”

Bridgeo said city expenses will be up in some areas due to the coronavirus, including increased public safety costs and a spike in requests for general assistance that provides residents in need with help meeting their basic necessities. In response, the city has increased the hours of a part-time general assistance worker and another city worker with case work experience is also helping out the department’s two full-time workers. Bridgeo said workers are stressed out by the influx of people seeking assistance, including tenants facing potential eviction from their apartments.

At-Large Councilor Marci Alexander suggested local officials document expenses and seek federal funding, such as from the Federal Emergency Management Agency or the CARES Act.

Bridgeo responded that officials are doing that, adding that Roger Audette, fire chief and emergency management director, provides training to other departments on how to secure reimbursement for such emergency expenses.

One area Bridgeo doesn’t anticipate getting funding help is the Augusta Civic Center, where numerous scheduled shows, meetings and other events have been canceled due to social distancing protocols, cutting off revenues usually generated by the facility. He said federal business assistance funding can go to privately owned civic centers, but not government-owned facilities like the Augusta Civic Center, or similar facilities in Portland and Bangor.

At-Large Councilor Darek Grant suggested the city reach out to Maine’s federal legislative delegation to see if legislation can be submitted so, in the future, such facilities could be eligible for funding help during times of crisis that drastically impact revenues. Bridgeo said he could prepare a resolution for councilors to consider, at their business meeting next week, asking Maine’s four members of Congress to try to address the issue.

Mayor David Rollins said that in a mayor’s coalition conference call with Gov. Janet Mills on Monday, she indicated that due to the emergency the state’s municipalities could use their current year’s budgets for next year.

St. Pierre said it’s not that simple, in part because municipalities rely heavily on state revenue sharing and school funding to offset costs. He said a commission that projects what state revenue sharing will be has not yet met to revise projections sure to be impacted by the coronavirus.

St. Pierre noted the city has survived recessions before, including in 2002-2003 and 2007-2008.

“Economic downturns are not uncommon; we’ve all lived through recessions,” he said. “It’s not always pleasant and not always easy, but it’s an experience we’ve had and we’ve done it.”