Budget crunch: City plans for worst, hopes for best
SOUTH LAKE TAHOE, Calif. — With Fourth of July celebrations canceled and nervousness over a second wave of the coronavirus, it’s unclear what South Lake Tahoe’s summer will be like.
In an attempt to prevent a massive loss of income and to keep the city in a good place financially, City Manager Joe Irvin has implemented several cost saving measures.
During the city council’s June 9 meeting, Debbie McIntyre, director of administrative services, presented possible scenarios for summer finances.
An optimistic view shows a loss of $4 million from the lack of transient occupancy tax and sales tax between now and Sept. 30 and a pessimistic view shows a loss of nearly $7.6 million.
With a plan for the worst, hope for the best mentality, the council voted to adjust the 2020 budget with the pessimistic outlook in mind.
Irvin has been working with different city departments to make budget adjustments such as delaying projects or purchases or finding cheaper solutions for projects.
Irvin’s mentality though is, despite financial uncertainty, the city should not necessarily put off vehicle purchases or important projects such as road maintenance.
“The longer you put off the replacement or rehabilitation the more strain it adds down the line,” Irvin said.
The budget adjustment residents are likely to see is a hiring freeze Irvin implemented. The city is not filling vacant positions, such as the part-time and seasonal positions. The city is also reviewing and deciding what recreational programs to implement this year and which ones to postpone.
“It’s going to take awhile before we are fully operational,” Irvin said.
So what happens if this summer is like any other summer in terms of tourism?
“I have no intention of removing the hiring freeze,” Irvin said, adding that it will mean there will be less loss from TOT and sales tax.
Irvin also notes that the hiring freeze did not pertain to public safety personnel.
Irvin predicts the cost saving measures will be about $2.4 million.
The city is also going to do a one-time balance transfer from reserves. However, under the pessimistic view there will still be $2.6 million in unassigned reserves.
So a big take-away is that these cost saving measures are not desperate acts, rather an attempt to clot the bleeding so that the city doesn’t see a huge hit down the line. For example, the city has not yet considered layoffs or pay cuts.
“We are not to the point where we’re discussing that and hopefully we don’t get there,” Irvin said.
Models are showing that impacts won’t be fully seen until two years from now and financial losses will likely continue until a vaccine is made available.
“We’re doing the best we do with the information we have to project the future,” Irvin said.
Still, Irvin said when they begin crafting the 2021 budget at the end of the summer, he has “every intention to build next year’s budget to provide the same level of service.”
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