Kingston, New York officials say their city could lose up to $5 million in revenues because of the COVID-19 pandemic. They expect to collect significantly less sales and property tax revenue than estimated, and they expect a decline in other revenue sources.
Democratic Kingston Mayor Steve Noble and the city’s comptroller have proposed an economic recovery plan to the Common Council that would occur in three phases, and Noble wants the council to implement Phase 1 immediately. It includes departmental budget cuts, a hiring freeze and overtime pay reductions. These measure are estimated to save the city about $1.6 million.
“One of the things that cities rely on is sales tax and, with the sudden downturn in businesses, we won’t start to see those sales-tax receipts until the next week or so. And then, as we go into the next month-and-a-half, two months, we’ll get to see the full extent of the turndown in the economy,” Noble says. “And so that’s why we wanted to take a phased approach starting where we know we could work, and that is within our own budget and cutting expenses.”
Kingston Common Council Majority Leader Reynolds Scott-Childress:
“Well, we like the general drift of what the mayor proposed,” Scott-Childress says. “We are going to be having a special meeting … We have our finance committee meeting coming up very soon, and then we will have a special Common Council meeting to vote in any of these proposals that we think merit approval.”
The timing for any approval is next week. Scott-Childress, a Democrat, says the question mark of sales-tax revenue isn’t the only unknown.
“We are still not clear exactly what our total income has been, our total revenues have been from the recent property tax take that was due on April 30,” says Scott-Childress.
Noble is hoping the federal government’s next coronavirus aid package includes direct relief for local governments. He says bills under discussion include $5 million -$7 million for cities the size of Kingston.
“In this entire situation, we really are pushing the federal government to help cities like the City of Kingston, and others, because this is, again, an unprecedented situation and it’s a pandemic that really is affecting everyone,” Noble says. “And local municipalities, in particular, rely so much on the ability for the local economy to be open in terms of their revenue sources, and we’re just really concerned about what the future may hold if we don’t get some sort of relief.”
Scott-Childress talks more about the mayor’s proposed phases.
“We have a nice cushion for a little while. And so that’s where that Phase 1, if you look closely at it, a fair amount of that is related to our fund balance because we actually are over the recommended 10 percent-13 percent fund of budget and fund balance,” Scott-Childress says. “And so we can use that as a cushion for the first phase but, as we move into the second phase and third phase, that’s when we have to start looking at potential for short-term or long-term or permanent layoffs because, of course, as with most municipalities, that’s where the bulk of our spending is.”
Noble says Phase 2 would be implemented if mid-range loss estimates become more realistic based on early sales tax returns and/or confirmation of local aid cuts by the state.
“It’s a very condensed time frame because we recognize the initial Phase 1 of cutting $1.6 million from our budget is effective immediately, basically. Phase 2, when we start talking about temporary layoffs, that would be the next phase, which could begin as early as the next few weeks to a month from now, as well as more permanent layoffs which potentially have to occur just a month or two later from that,” says Noble. “And so I think that that entire time frame could change tomorrow if we see instead of a 20 percent reduction in sales tax that we end up seeing a 60 percent reduction in sales tax, and that could have us skip all the way to Phase 3 of our plan. And so one of things that we’re trying to educate the Common Council and the community about is that this is a nimble plan and something that is really based on all of the financial indicators, but we also want to see some of those financial indicators before we disrupt people’s lives and before we disrupt services.”
Phase 2 could include a targeted retirement incentive for eligible employees. Phase 3 would become a reality if Kingston’s fiscal outlook showed signs of a high-loss scenario.