The financial impact of the COVID-19 pandemic is already being seen in state unemployment—more than 100,000 Arizona residents have filed for unemployment assistance.
Though Gov. Doug Ducey’s order allowed restaurants, grocery stores and other “essential businesses” to remain open, most local businesses were ordered to close March 31.
The resulting plummeting sales are likely to put a major dent in the city of Glendale’s revenue stream.
The 2019-20 Glendale budget projects $117 million in sales tax, just over half of the city’s total projected revenue of $230 million (all revenues except property tax). Glendale general fund expense projections totaled $222 million.
“We are continuing to evaluate the fiscal impact to the city budget brought on by the current COVID-19 pandemic,” said Mat Droge, a Glendale spokesman.
He said Kevin Phelps, the Glendale city manager, has instituted a temporary hiring freeze (“except for critical positions”).
“And we have also suspended any noncritical spending until further notice. The city is monitoring the situation closely to determine if additional financial measures may need to be taken in the future,” Droge said.
He noted there is a two-month “lag” in receiving portions of sales tax.
“Glendale won’t be able to see the full impact of the closures on March revenue until at least the middle of May,” Droge said.
Asked about potential cuts in staffing, Droge again said it was too early to determine.
“We are continuing to evaluate the fiscal impact to the city budget brought on by the current COVID-19 pandemic. Until we gather more information, it is premature to comment on our fiscal year 2020-21 budget,” he said.
While economic issues could be discussed during the next city council meeting 5:30 p.m. Tuesday, April 28, a workshop specifically dealing with the city budget is scheduled May 5. The next fiscal year starts July 1.
The federal government has pledged assistance to cities, though only cities with populations above 500,000 are to receive direct assistance. Glendale and other smaller cities will receive a yet-to-be-determined portion of federal assistance sent to the state.
But, according to Droge, Glendale is expecting around $3 million from the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Congress overwhelmingly passed the CARES Act, which was signed into law by President Donald Trump March 27. “This over $2 trillion economic relief package delivers on the Trump administration’s commitment to protecting the American people from the public health and economic impacts of COVID-19,” states the U.S. Treasury Department’s website.
According to information at that site on local and state government assistance, “The CARES Act requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that: are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the state or government; and were incurred during the period that begins on March 1 and ends on Dec. 30.”
According to Droge, Glendale expects $2 million in public housing assistance, “in addition to our regular allocation of Community Development Block Grant and Emergency Solutions Grant money and specifically for COVID-19.”
Another $1 million is expected from the Federal Transit Administration, again related to COVID-19.
“We are evaluating the requirements and allowable use of each grant, and until we gather more information, it is too early to determine the use of the funds,” Droge said.
“We are also continuing to evaluate COVID-19 federal and state grant funding opportunities and we plan on applying for these grants.”