Current forecasts indicate that the City will experience significant revenue shortfalls due to COVID-19, and we should expect to see the effects of COVID-19 on the economy for the rest of the year. The city’s most economically sensitive revenue sources are under extreme pressure. Sales tax make up, on average, 32% of the general fund’s revenue. The city receives approximately 57.5% of our sales tax from retail and another 11.4% from accommodation and food services. The expectation is that sales tax receipts will reflect the significant pressure these two industries are currently under. Good fiscal management from the Governing Body, staff and the buildup of reserves over the last six years allows the city to be in a better position to address the financial issue at hand.
This type of loss in one budget year is substantial and cannot be made up with minor changes in the budget. It will require major changes in expenses. A three pronged approach will be used to reduce expenses including the use of reserves, non-personnel and operational changes and personnel spending reductions. Non-personnel spending will be reduced or eliminated in areas such as education and dues, capital purchases in the general fund, demolition funding, office supplies, and other areas that are still being reviewed.
The current revenue forecast requires a response and a 3% salary reduction is being implemented for management and executive staff. The city is asking union employees to make the same 3% salary reduction. A hiring freeze has also been instituted unless there is a critical or citywide operational need for the position.
“The City of Topeka has engaged in sound financial management, which has given us the ability to manage decreases in revenue during this pandemic while still keeping essential services going,” said City Manager Brent Trout. “I appreciate the sacrifices made by staff and appreciate everyone’s understanding during this difficult time.”
The financial situation of the city during the COVID-19 process is fluid and will require constant monitoring of revenues and expenses to ensure that adjustments are made throughout the year. The City of Topeka is committed to providing essential services for our citizens every day, while at the same time remaining fiscally responsible during this crisis.
