MONROE, La. – A budget amendment introduced by the Monroe City Council this week could reduce the general fund budget by 5.7% in the current fiscal year.
The $3.5 million in expense reductions are being generated across all departments with CARES Act funding contributing the largest savings for the general fund. The expense cuts will offset revenue reductions attributed to the statewide stay-at-home order and the subsequent economic downturn.
This is the first budget amendment for the 2021 fiscal year, which started May 1. Budget amendments are generally proposed once per quarter based on changes in expenses and revenue.
The 2021 budget was approved by the council in April. At the Tuesday night meeting, Mayor Jamie Mayo explained the city charter requires the budget to be presented to the council by Feb. 1.
A budget hearing for the year was held on March 4, before the first iteration of Louisiana’s stay-at-home order was in place to prevent the spread of COVID-19.
“Approximately six weeks ago, we were looking at the potential impact on revenue,” Richards said. “We started out modeling various scenarios of how it is going to affect our budget.”
Richards explained both the current fiscal year for Monroe and the prior year are impacted by the changes. The 2020 year ended on April 30.
The $3.5 million in projected general fund revenue declines are primarily based on sales tax collections.
Richards said the city started looking at cost-cutting measures that could be implemented.
“The largest cut has to do with subsidies to the transit department,” he explained. “The FTA awarded our transit system some CARES Act money, approximately $4.8 million, we realized we could utilize for our subsidy to transit. It is roughly $2.3 million, and we could utilize those funds … so our general fund does not have to subsidize it.”
Other cuts were previously announced by the city and include overtime reductions, capping hours for part-time workers, eliminating the summer worker program, reducing travel, and a one-hour weekly furlough for employees.
Director of Administration Stacey Rowell said the city started by cutting in all other areas before setting the furlough, and it was a last-resort measure.
“We limited that as much as we could,” Rowell explained.
Richards said initial projections on sales tax declines were for a 25% reduction in March, 50% in April and May and then a slow recovery with a 30% reduction in June. The recovery then continues until December when a 2% decline is projected.
Councilman Doug Harvey asked if the city was looking at the more optimistic end of projections as some models show as much as a $10 million reduction in revenue.
Rowell said she felt the projects were conservative and explained Richards is reviewing data regularly while generating weekly reports provided to department heads.
Richards explained in March the city only saw a 12% sales tax decline with a 25% projection. April collections are ongoing, and the city is at 53%.
Harvey also asked if the city was cutting enough.
“It may not be, but until we see a little bit more information, we felt like we’ve done what we needed to do at this point,” Rowell said.
Rowell also said the city expects to receive additional federal funding.
“We deal with this weekly,” Mayo added. “We are on top of it. The department heads are on top of it, so we always know where we are.”
In addition to the reduction in subsidies for the transit department, subsidies for the RiverMarket were cut by $7,543. The Civic Center will receive $51,225 less from the general fund and the zoo $54,228 less. Central Shop subsidies were cut by $31,407.
Tuesday’s budget amendment followed previous announcements by the city that it is facing a $1 million operating budget deficit for the 2019-20 fiscal year.
Before the coronavirus shut down the state, the city was projecting a $600,000 surplus for the same time period.
Tuesday’s budget amendment will be up for final approval at the June 9 council meeting.
