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City looking at financial adjustments from COVID-19, potential ways to mitigate losses

Posted April 7, 2020

It’s difficult to know today what the eventual economic impact of the COVID-19 pandemic will be to the City of Fort Worth, but city officials expect to see repercussions from the economic slowdown. While the numbers will continue to change, the city is looking ahead at the possible impacts of this public health emergency and what it means for the community.

“On the financial side, the COVID-19 pandemic will be impactful, not only to the City of Fort Worth as an organization, but to our local businesses as well,” said City Manager David Cooke. “Fortunately, we entered this challenge in a strong position – the local economy was extremely strong and the city was in a very strong financial position. Throughout this pandemic, we have been and will be out there providing needed services to our residents.”

Revenue impacts

The city’s budget staff is reviewing revenues for all funds, including:
Sales tax. Sales tax contributes 22% of General Fund revenue, or $172.8 million annually. The sales tax has shown strong performance through February; returns are about $2.2 million above budget through February. Retail sales are by far the leader in Fort Worth’s sales tax collections. Unfortunately, the business shutdown has strongly affected the retail segment. Sales tax could fall short by up to $26 million in the second half of the fiscal year. Online sales, whose taxes are collected at the shipping destination, may provide some cushion as residents resort to placing more online orders due to stay-at-home directives.
CCPD. The Crime Control and Prevention District, which relies on 1/2-cent of the sales tax, is projected to take a hit up to $12 million this fiscal year.
Development revenues. City staff has seen an 18% reduction in building permit activity and a 36% reduction in platting activity. If this continues for the remainder of the year, General Fund losses could range from $2.2 million to $3.6 million.
Fines. Loss of fines paid to the city for Municipal Court cases and other sources could range from 30% to 75% in budgeted revenues initially, then climb back to a 15% loss in the final two months of the fiscal year.
Public events. Projected losses from events that are not being held total between $15 million and $25 million.

Mitigating revenue loss

City leaders plan to implement strategies to mitigate revenue losses. Some of the ways city leaders can deal with the projected revenue loss include:

  • Hiring freeze for city personnel, except Civil Service (police and fire).
  • Discretionary spending freeze.
  • Holding off on certain capital projects to save up to $50 million in unspent pay-go revenue. These infrastructure projects are paid for with cash instead of relying on debt.
  • Prioritizing programs and services by fund.
  • Evaluating capital projects that add operating costs.

City officials plan to fully use available federal aid to benefit the community. As much as $166 million in preliminary aid could be available to city coffers, depending on eligibility requirements that are unknown at this time. The largest amount would likely come from the U.S. Treasury Department’s CARES Act, which provides direct, fast relief to American workers and businesses.

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Fort Worth Human Relations Commission: 5:30 p.m. June 1, 2020; WebEx.
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DFW International Airport Retirement/Investment Committee Meeting: 12:30 p.m. June 2, 2020; Conference Call.
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DFW International Airport Operations Committee Meeting: 12:45 p.m. June 2, 2020; Conference Call.
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DFW International Airport Finance/Audit Committee Meeting: 1 p.m. June 2, 2020; Conference Call.
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DFW International Airport Concessions/Commercial Development Committee Meeting: 1:10 p.m. June 2, 2020; Conference Call.
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City Council Work Session: 3 p.m. June 2, 2020; City Council Conference Room 290, 2nd Floor, City Hall, 200 Texas St.
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Canceled Financial Empowerment Workshop Series: 6 p.m. June 2, 2020; Northside Community Center, 1100 N.W. 18th St.
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City Council Meeting: 7 p.m. June 2, 2020; City Council Chambers, 2nd Floor, City Hall, 200 Texas St.
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Tax Increment Reinvestment Zone Number Four (Southside TIF) Board of Directors Meeting: 2 p.m. June 3, 2020; WebEx.
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Community Development Council Special Called Meeting: 6:30 p.m. June 3, 2020; WebEx.
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Dallas Fort Wort International Airport Board Meeting Conference Call: 8:30 a.m. June 4, 2020; Conference Call.
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Metropolitan Area EMS Authority DBA Mestar Mobil Healthcare Meeting and Board of Directors Budget Workshop: 10 a.m. June 4, 2020; Conference Call.
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Canceled Financial Empowerment Workshop Series: 6 p.m. June 4, 2020; MLK Community Center, 5565 Truman Drive.
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