Solon Mayor Edward H. Kraus said last week that he is anticipating $7.1 million in revenue loss for 2020 due to the impact of the coronavirus pandemic.
“These numbers will give you an idea of the magnitude of what we are facing,” Mayor Kraus said to City Council last week. “It’s not great, but we need to be transparent with what we are doing and do it with a sense of purpose and calm.
“But we have to do it.”
He presented a preliminary seven-point plan reflecting estimated shortfalls and proposed spending cuts.
Prior to the pandemic, this year’s budget was $45.6 million. The current budget projection is $38.5 million, the mayor said. Further losses may occur in 2021, he added.
“That is a big variance in the budget, and that is why we all decided that we have to make these cuts now,” the mayor said of the projected shortfall. “I felt like if we don’t do it now, there will be too much of a burden on us later in the year and it will create a problem for the 2021 budget.
“It’s an early number subject to change,” he continued, “but there are indications based on preliminary figures from RITA (Regional Income Tax Agency).”
He said the current forecast of income tax collections show a 13 percent decrease for this year. “It’s an early projection, and we won’t have the full numbers until July.”
It is a 13 percent decrease from the original estimate, Finance Director Matthew Rubino noted.
The city typically collects about $42 million annually in income taxes.
Other revenue sources in addition to income tax have an anticipated decline of 25 percent, he continued.
“It’s early and that also can be subject to change.”
Each department head has submitted a reduction plan to Mr. Rubino and were asked to abide by objectives, Mayor Kraus explained.
Cost containment measures amounting to $2.8 million for general fund budget reductions were outlined as part of an initial phase, the mayor said.
The cost containment is a combination of many different things, including not replacing people who have retired. Holding 10 vacant positions open this year will result in a savings of $430,000; a reduction in overtime will result in a savings of $250,000; and a reduction in part-time staffing and freezing the hire of part-time or seasonal staff resulted in a savings of $800,000. There will also be cost savings in the reduction of training, materials and supplies, he said.
Cuts to events and programming, including all of the bicentennial events and summer events like Home Days and the fireworks display, among others, also contribute to cost cutting. That amount is difficult to pinpoint as all these events also include staffing, the mayor said.
Another large chunk, about $600,000 to $800,000 is being saved by deferring capital and infrastructure projects to next year or later. They have also put off heavy equipment purchases, he said.
Reductions also are proposed from self-funded budgets including the Water Reclamation Department and Grantwood Golf Course. They have their own enterprise funding, the mayor said, and those exact amounts are not yet clear.
The mayor said in giving these projections that, they are the result of a good and strong start to the year for the first two and a half months prior to the downturn.
He said of these cuts that it is a two-year process.
“If you think it will end this year, you’re sadly mistaken,” Mayor Kraus said. “2021 will be a difficult year for us. We will make significant cuts” and revenues will be lower.
He said the next two years will be the toughest, and “we were all disappointed we have to make these cuts.
“But the reality of it is, like with programming, you couldn’t do it with large crowds safely this summer,” he said. “We just couldn’t do it, and it does provide a lot of savings as well.
“This is not my greatest strength, having to do this and make difficult cuts,” the mayor said, adding that the programming cancellations was also a very difficult decision. “I don’t relish in making these decisions but you have to do it for the health, safety and welfare of the community.”
“We’ll get through this as a community and a team,” the mayor added.