SPOKANE, Wash — Amid the COVID-19 pandemic, business has slowed to a crawl across the nation and in Spokane.
No business means no sales tax revenue at a time when the city needs to spend more money to deal with the virus.
Recently, the city's finance department presented very preliminary models to administration and council, outlining how lost revenue may impact the budget.
The models are only projections, and like the models for the spread of coronavirus itself, liable to change rapidly. The existing model is based on data from late March.
The first round of projections estimates that the amount of sales tax revenue Spokane will take in this year may drop from roughly $53 million to roughly $42 million. Combined with other possible losses, that's a roughly 6% drop in general funds.
Sales tax makes up about a quarter of the general fund revenue. The bulk of that goes to paying salaries and benefits for city employees.
So what does losing sales tax revenue mean for Spokane? Right now, nothing too dire. Here's why.
One, the city's already instituted a few cost-saving measures, such as a hiring freeze.
Two, Spokane has built up a pretty sizable reserve fund, meant for situations exactly like this.
Three, city leaders expect Spokane will be getting quite a bit of money from state and federal stimulus efforts.
So how all this shakes out is still to be determined.
"There's going to be a reduction in sales tax over this year, we have no idea how much. And at the same time we're going to get a bunch of money from the federal and state government," said Spokane City Council President Breean Beggs. "How that balances out at the end, I really don't know."
But right now, layoffs or serious program cuts are not on the table.
The real issue would come if the economy is still in shambles come next year. Then the city could face a longer-term budget problem, and be unable to further exhaust reserve funds.
For now, though, city leaders are focused on cutting costs where they can, while also increasing the amount of resources the city is offering its citizens, who are in extra need.
"We're doing both at the same time," Beggs said. "We're spending money and trying to save money strategically."
The finance department will be periodically updating its models as new data becomes available.