City of Arlington anticipates $18.3M revenue loss as a result of COVID-19

The plaza outside city hall sits empty April 13 in Arlington. Arlington projects a $18.3 million revenue loss to the city because of lower sales tax, interest and court revenues amid COVID-19.

Arlington projects a $18.3 million revenue loss to the city because of lower sales tax, interest and court revenues amid COVID-19.

City manager Trey Yelverton gave a presentation to the Arlington City Council on April 14 and said sales tax has always been a strong indicator of the city’s economy.

“We're very dependent on a highly elastic tax form. So it's great when sales are going gangbusters,” he said. “It's less great when they're not. As you can imagine, we're dealing with significant pressure in the sales tax area right now.”

The city expects other revenue impacts across fee collection, including liquor taxes, development-related revenues, franchise fees and hotel occupancy tax, Yelverton said. The financial challenge for the city is not so much expenditure as it is revenue loss, he said.

The bills Congress have passed are helpful for unexpected expenditures, but the city doesn’t have a ton of expenditures to reimburse itself with, and it’s unable to reimburse COVID-related revenue loss, he said.

“So until we see some light at the end of the tunnel relative to how these types of programs at the federal and state level potentially could assist us, we're planning on working this out on our own,” Yelverton said.

Similarly to how city residents and small businesses are approaching their needs, the city is as well, he said. The city is looking to reduce its current expenditures, use some of its savings and suspend planned purchases in a five-phase process, he said.

Phase one of the city’s plan to balance its budget includes freezing vacant positions for the rest of the year, suspending employee raises, freezing vehicle purchases and IT service enhancement projects and suspending library book purchases, among other things. Yelverton said this phase has already happened.

Phase two includes some financial restructuring in the park fees program. The program collects fees for new developments in a certain zone for future park expansion and development, Yelverton said.

The council approved the park fee ordinance at the April 14 evening meeting and moved forward with phase two. The ordinance consolidates all the zones into one zone which allows usage of funds citywide and also allows for investment, maintenance and operation costs and not just the capital cost for the park system, Yelverton said.

If the city receives assistance elsewhere, then it will be welcomed and help restore actions taken during this time, Yelverton said.

“We're having to make difficult decisions in order to balance our budget the same way that everyone else out there is doing so,” he said.

In efforts to seek federal financial relief, Mayor Jeff Williams, along with over 100 Texas mayors, sent a letter to the Texas Congressional Delegation on April 15 regarding funding provided in the Coronavirus Aid, Relief and Economic Security Act.

According to the letter, the CARES Act, which went into effect March 27, states that the fund will provide direct financial assistance to cities with a population of 500,000 or more; however, it leaves out hundreds of Texas cities with millions of residents.

“We simply do not understand the population cutoff in the CARES Act,” the letter states. “Simply put, there is no magic force that will protect local governments under 500,000 population from revenue losses during this crisis.”

The letter asks for Congress to pass a fourth bill to help with COVID-19 and provide direct and flexible financial assistance to all cities in the nation. The letter also asks Congress to correct the CARES Act to give more flexibility in allowing cities to fill holes in their budgets.

“All of our cities are facing a devastating collapse in revenue at the same time we are facing an exponential increase in demand for our services, especially on the public safety front, which accounts for the bulk of local government budgets,” the letter states.

@bjgarcia27

news-editor.shorthorn@uta.edu

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