Virus, tornado impact city budget process

In just over a month the city of Ruston will begin its new budget year.

But exactly what the 2021 spending plan will look like is still largely a guess because of the influence of the novel coronavirus and FEMA money still owed to the city in reimbursement for the 2019 tornado damage.

“We’re going to give it our best shot with what we know and what we’re seeing,” Julie Speir, the city’s treasurer and chief operating officer, said.

Ruston’s fiscal year begins Oct. 1. And, while the process of putting together a budget used to be fairly routine, the economic impact of the novel coronavirus, plus the FEMA funds still outstanding, have thrown the old ways out the window.

“Normally our process would be to look back at the last year’s revenue and maybe the year before that and get some kind of trend,” Mayor Ronny Walker said.

But mostly because of the coronavirus and its unknown impact over the months to come, building a budget around trend lines won’t work this year.

“There is no playbook. There is no study. There is no history to go on,” Walker said.

“We can’t even annualize the current year because this is not a normal year,” Speir said.

City department heads have been told to keep their budget requests flat for the coming year. If they do, that means Ruston would likely spend around $63 million next year.

That’s what’s budgeted for expenses for this year. But it’s the revenue side — which determines money available for spending — that’s the question. For 2020 the city budgeted slightly over $70 million in income.

That was pre-coronavirus.

On March 23, Louisiana went under a stay-at-home order. Nonessential businesses were closed. The order remained in place until May 15.

Walker feared sales tax revenue, which forms the bulk of general fund income, would plummet. It did, but not by the halfmillion dollars Walker had feared.

Figures provided by City Hall show collections were down only by 11%, or $146,610, in April of this year compared to April of 2019.

“We’re just ecstatic,” Walker said at the time.

By May, the decrease was even less. So far, the city is down a total of about $250,000 in sales tax.

Throughout the stayat-home order, grocery stores and local big box stores remained open. Plus, those were the same months a number of people received federal stimulus money and unemployment benefits, Walker said.

All of that helped the numbers not sink any lower, city officials say.

But what happens now that stimulus funding is past, Walker wonders. There’s talk in Washington, D. C., of another round, but it’s not a given.

Moreover, the mayor wonders, what if fewer students than expected return to on-campus classes at Louisiana Tech and Grambling State universities? What kind of spinoff could that have in the local rental housing market, and in restaurant and retail sales?

What if cases of COVID-19, the respiratory illness caused by the coronavirus, continue to increase, causing yet more rearrangements in activities like football? Not only do downtown merchants get a boost from football weekends, but so do local hotels.

All of the new “what if ’s” are making the budgeting process tough, Walker said.

“It’s been very hard and a very trying time, because nobody can tell us,” he said.

Plus the city is locked into paying ever-rising retirement system costs over which it has no control.

For the fiscal year that ends Sept. 30, the city budgeted $3.7 million in retirement contributions. But, effective July 1, the rates in each of the three plans into which Ruston pays — police, firefighters and municipal employees — went up.

“So, we know we’re going to end (the year) well in excess of $3.7 million,” Speir said.

Meanwhile, Louisiana is now in Phase Two of economic reopening, meaning most businesses have resumed operation, albeit with restrictions on the number of patrons at one time, for some.

While that increased potential commerce could boost sales tax numbers, it still won’t fill all of the gaps, officials said.

Ruston is still waiting on approximately $2.5 million in FEMA reimbursement from the 2019 tornado. Plus there’s $1 million in federal CARES Act assistance for which the city has gotten clearance and is awaiting a check, and another $659,000 for which it’s applied but heard nothing so far.

The city plans to apply for another $1 million in the third round.

“Whatever we get, we’re going to be thankful for,” Walker said.

The Board of Aldermen is scheduled to get the 2021 budget on Aug. 19. They’ll meet Aug. 20 to discuss it and, if all goes according to plan, introduce it for adoption at their Sept. 14 meeting.

Officials anticipate more budget amendments than usual in thecoming year because of all of the unknowns.

“We’re going to have to monitor this more closely than we ever have,” Speir said.