By Chris Frost
Oxnard-- As residents reel over job and business losses caused by COVID-19, the City of Oxnard faces some difficult times ahead as it loses large amounts of tax revenue due to businesses staying shut down.
The city already faces a budget deficit during the fiscal year 2019-2020 and made significant cuts this year to keep going.
Chief Financial Officer Kevin Riper spoke about the item and said the city's financial fortunes changed quickly because of COVID-19.
He couldn't believe that the price of oil sat in the negative range, and 60 days ago, things were fine.
He noted that all 26,000 employees who work for AMC Theaters are furloughed indefinitely.
"A dozen years ago, in the depths of the great recession, the worst week for Americans for unemployment, was a week in 2008 when 660,000 Americans filed for unemployment," he said. "That was the all-time record until a month ago. In the last four weeks, initial claims for unemployment benefits have averaged 5.5 million a week."
That means 22.5 million Americans filed for unemployment in the last month.
"That's the picture we're looking at," he said.
The statewide outlook for sales and usage tax, he said, looks grim at best as the current quarter shows a 30-37 percent reduction.
"Oxnard's sales tax forecast for both base tax and Measure O are not quite at a 30 percent decline yet, but after a sales tax forecasting call with HDO, our sales tax consultant, tomorrow (Apr. 22), we might be there," Riper said. "Michael Coleman (an expert on local government revenues in the state) is suggesting that the city reduce its transient occupancy tax (TOT) by 80-90 percent in the current quarter. The finance department and the city manager's forecast is an 83 percent reduction."
Additionally, the business tax has less impact, Riper said, because the city collects it on a rolling one-year basis and gets delayed, so that won't hit Oxnard all at once.
"Still, the League of California Cities suggests we reduce our forecast by 10-15 percent," he said. "All of those support the general fund right here in Oxnard."
Property tax generates 40 percent of the general fund revenue, and that revenue stream is not so gloomy.
"There would only be a property tax decline if folks can't pay, although eventually, they would, because the property would be liened, or if there is a decline in property values," he said. "The next property assessment date isn't until Jan. 2021, so there is time for the national, regional, and local economies to recover, at least in real estate terms, and not suffer a big decline in assessed valuations, which would lead to a decline in property tax."
City Manager Alex Nguyen outlined actions the city must take and started by the census, and this crisis directly relates to how well the city does with the census.
"A lot of the resources coming to us via the county come to us from the feds, and the resources coming to us, in the near future, is going to be based on our population count," he said. "There is no better way for us to emphasize how important it is that we complete the census, as best we can, in this community."
Anna Maria Lugo from the U.S. Census Bureau told the audience watching there is a paper questionnaire on its way to residents.
"Up until this point, it has been an internet response or a response over the telephone," she said. "When you receive yours, please fill it out and send it back. Or, you can continue to respond online at 2020census.gov."
So far, 50 percent of the households in the nation have responded, while in California, 52.2 percent have responded.
"In Ventura County, we are in the top five counties in the State of California," she said. "For Ventura County, we are at 59.2 percent in self-response. In Oxnard, we are at 50 percent in self-response. There are 8-9 tracks that will require a little more attention and require a little bit more outreach."
The Census Bureau has made operational adjustments because of the COVID-19 outbreak, she said, and they are adapting to protect the health and safety of the public and its census takers.
Currently all census field activities have been postponed and the self-response phase is extended until Oct. 31.
"People can still respond online, over the phone, and fill out their questionnaires as they receive them," she said. "Census takers will go out to interview people we haven't received their self-response from Aug, 11 until Oct. 31."
Nguyen said it's obvious that the economy is decaying rapidly, and there is a lot of debate about how long the recovery will take.
"We have a budget that we have to plan for," he said. "Given the circumstances, the way we have to approach this is that everything is on the table. There is no scenario that I believe is possible coming through this pandemic that public employees will get through this unscathed. It's not possible in any universe."
Nguyen said the executive staff would take pay cuts related to medical increases, step increases, deferred compensation increases, and their health club membership perk.
"That should yield approximately $130,000 in savings," he said. "While that isn't nearly enough to impact the budget, it's important that we, as leaders, do this."
That does not include Nguyen.
"My share of those cuts adds up to $12,500," he said. "I am going to, in addition to that, take a salary reduction for the next fiscal year, so my cuts will total $25,000 for the next year. If by some miracle we get a bonafide bailout from the feds, we can undo some of these."
Going forward, he doesn't want to plan and budget around any such federal bailout.
"I'll put that in writing for you in the near future," he said. "That, of course, doesn't begin to take care of our financial problems."
Nguyen hoped to establish a status quo budget for the fiscal year 2020-2021, after making cuts to eliminate $6 million from a $9 million structural budget in the fiscal year 2019-2020, he said, and due to the pandemic, that is "out the window."
"We have also been, over the years in this city, subject to consistent reductions to our staff, budget programming, and staffing," he said. "Our organization, coming into this, is already extremely lean. There is nothing left to cut or trim, in terms of what a healthy organization can look to do. Unless we are willing to eject entire programs and entire batches of services, there is not much left to trim."
The city is working to present a balanced method to get through the pandemic, he said, starting with using the general fund reserve.
"There is no moment better defined as a reason why anyone has a rainy-day fund," he said. "This is exactly the time, crisis, and circumstances to use our general fund reserve. I have asked the leaders of our labor groups to forego all future increases for the next fiscal year. I'm in the process of having that discussion with the labor leaders, and I am happy to say the leaders of IUOE (The International Union of Operating Engineers) and the mid-managers association have been supportive, so far. I'm still working with the other labor groups."
The city also needs to freeze hiring, although some positions are urgent, and they must add to the staff.
"We're going to scrub our various contracts and membership, and this is something we do year-after-year here," he said. "I don't think this will yield a whole lot of savings, but we must continue to look at them. We've already cut the part-time help, the fire academy, in large part, because given the physical distance requirements, there was no way to run the academy. That was 14 firefighter cadets we had to cut loose. We worked with the police department to cut police vacancy positions to save money."
Nguyen looks to examine ways not to use furloughs and layoffs to save money.
"We have the ability to borrow from our enterprise funds for the purpose of floating our cash flow," he said. "We're going to have to do that. Especially since when you look at our revenue, that is decreasing significantly. What's left, the governor has passed an order allowing payment of sales tax to the government to be deferred. The large categories are for 90 days, and the other categories for up to 12 months. What left from our sales tax revenue that we were expecting, we won't be getting in this fiscal year, or the next fiscal year."
He reminded everyone that it's a loan the city has to pay back with interest.
"We'll be discussing that in more detail when we get the sales tax and revenue projections next week," he said.
Nguyen hopes a federal bailout will happen after the current stimulus bill gets through the house and senate.
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Oxnard, California 93030
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