No revisions to the city of Reno’s budget are planned in the short term due to the COVID-19 pandemic, although a hiring freeze remains in effect for most vacant positions.
There’s currently insufficient data to make budget revenue forecasts to determine the economic impact of coronavirus. Consolidated tax, the city’s major revenue source, has a two-month lag in reporting, so the first data showing impact of the pandemic will not be received until the end of May.
Municipal budgets are due to the Nevada Department of Taxation on June 1. The fiscal year starts July 1. Budgets can be amended if necessary.
Mayor Hillary Schieve suggested the council meet to discuss the budget on a bi-weekly basis. She urged the council to support the budget during Wednesday’s meeting because of the state deadline with the possibility of it being adjusted.
“Moving forward, things could change,” Schieve said. “We’re in volatile times.”
City officials also acknowledged that all revenues and expenditures will need to be reviewed as the COVID-19 crisis unfolds.
“A status quo budget allows maximum budget flexibility to manage the downturn in revenues by allowing the targeting of expenditure reductions and other mitigating actions as the extent of the downturn becomes clearer,” city Finance Director Deborah Lauchner wrote in a report to council members. “Keeping a status quo budget will provide a baseline to measure the extent of the financial impact from COVID-19 as future budget years are planned.”
In addition to not filling most vacancies, city staff is only approving purchase orders of essential supplies. Additionally, areas of flexibility in the budget include contingency funds, stabilization funds, medical premium holidays and reducing transfers to internal service funds.
Councilmember Naomi Duerr said that the city’s “hold-the-line” budget was the right tack. She noted significant measures including $5 million in savings through an employee hiring freeze and not filling vacant positions as well as the lay off of nearly 400 temporary and part-time workers mentioned by Reese.
Councilman Devon Reese said the city began taking action early on.
“There are things we did do immediately. We laid off nearly 400 people in our Parks and Recreation Department, we’ve transferred where we could, and we’ve also done significant budget freezes in terms of hiring freezes…,” Reese said. “I think we are telling the public we understand the gravity of this situation and we’re taking an approach that says, ‘While the state of Nevada requires us to have a particular path and timeline for the adoption of a budget, we know whatever our budget that is submitted will have to have changes.’”
The city also expects to receive federal and state grant money to assist in recovery, while city staff is pursuing a federal business interruption coverage insurance claim for lost revenue and expenses incurred during the pandemic response.
Reno’s budget reflects a 4 percent growth in consolidated tax distribution and property tax growth of 5.5 percent due to a robust housing market during the last year. Approximately 58 percent of general fund revenue is derived from consolidated tax (33 percent) and property tax (25 percent).
Some city fees, such as those for parks and recreation, are being adjusted based on the consumer price index to recover costs for most areas.
When comparing numbers from this past year, to next fiscal year:
- Property tax revenue is projected at $78.8 million, up from $75 million a year ago.
- Total revenue is projected to decrease from $292.5 million to $289.8 million.
- Total expenditures are expected to drop from $335.4 million to $293.2 million
Approximately 61 percent of the city’s general fund expenditures goes toward public safety, which consist mostly of police and fire protection.
