Columbia city manager warns of possible service cuts as COVID-19 hits revenue

COLUMBIA, Mo. (KMIZ)

Columbia City Manager John Glascock said Thursday that he is directing departments to make plans for 10 percent cuts as the COVID-19 pandemic continues to hit city revenue.

Glascock, speaking during the annual State of the City address at City Hall, said it's hard to gauge the impact of COVID-19 on the local economy as the pandemic isn't over yet.

Watch a replay of the address in the player below.

The City of Columbia relies heavily on sales tax to fund services, but Glascock said it might be time to look at different forms of revenue. He warned of hard budget decisions that will have to be made after COVID-19 dragged down revenue.

Glascock said he has asked city departments to submit budgets that include 10 percent reduction in spending, but he said that doesn't mean the entire 10 percent will be used.

City departments could see cuts in materials and supplies and might have to reduce services, delay projects and eliminate positions.

Glascock asked city department directors who have more than 150 vacant positions to assess what positions provide critical needs and core services.

Glascock also mentioned that capital projects also have an impact on the city but there may be programs that the city can't afford anymore, such as energy efficiency programs and providing curbside recycling. 

“I think this week we had out of 59 positions collecting trash and recycling, I think it was either 16 or 19 people who showed up to work," Glascock said. "We can't keep that up."

The city is now looking at moving downtown parking enforcement positions to the police department to provide an increased police presence downtown. 

Glascock said he believes this pandemic will have a long-term impact on the local economy as the job market continues to decrease and the unemployment rate goes up.

Boone County has seen about 20,000 unemployment claims related to the pandemic.

“It will have a big impact on our community,” Glascock said. “Not only will it have an impact on individuals, families and businesses, it will also have an impact on the city’s budget and level of services we can provide.”

The City of Columbia is currently in a hiring freeze with the exception of positions that provide a critical service. 

The City is looking at delaying projects to have a cost savings now to provide residents with infrastructure and road maintenance projects that were previously promised. 

Utilities costs are not favorable so the city is working on how to make adjustments to continue providing safe and reliable utilities.

Glascock said the City does not have the data to make very reliable projections of the future of sales tax revenues, he said this was a conversation that was brought up prior to COVID-19 as more consumers start buying things online. 

Glascock said there has been some federal and state government aid but that was one-time funding that wont cover the total anticipated loss in revenue. 

More residents are staying at home causing a decrease in sales tax collection, which Glascock said will likely affect hotel/motel tax, motor vehicle tax and transportation tax. 

Glascock said this reduction will impact funding on maintenance and construction of roads, capital projects, utility services, and parks and recreation. 

The reductions will also affect the city’s general fund which could require city officials to look at how the city generates revenue in order to still provide the same level of services. 

Glascock said this year is another year that the City cannot tax online sales. He said its a two- step process thats now up to the governor to decide how to handle to the tax bill.

Last year city officials estimated an annual revenue loss of $5.4 million from untaxed online purchases. Glascock said this year the city estimates a loss of $5.7 million. He said COVID-19 and the stay-at-home orders could’ve potientaly increased online shopping. 

Glascock explained that the cumulative estimated loss of local sales tax to the general fund from increased online sales from 2010-2019 was about $17.2 millions. 

Glascock said having a tax in place helps fund road repairs, public safety and public health services. And that these are core functions that must be sustained to maintain a secure quality of life for Columbia. 

Glascock said the city government is looking at how they can consolidate the customer touchpoints to make it easier for people to do in-person business with the city.