Despite the COVID-19 hit to the economy, there are no plans to lay off City of Hays employees or to cut city services to the community, according to City Manager Toby Dougherty.
“We’re not there yet, and it’s really not something I’ve considered right now,” Dougherty said of employee layoffs or furloughs. “It would be a rationary measure that comes later on. I can’t see enough of a revenue decline that we couldn’t absorb and move forward … worse-case scenario we’d have to put a hiring freeze in place.”
Speaking to the Hays City Commission at its regular meeting Thursday in City Hall, 1507 Main, Dougherty said it’s possible the city might not fill positions that come open when people retire or quit to downsize by turnover.
“Furloughing is a pretty drastic cut that I don’t see us taking right now,” he told the commissioners.
Longtime commissioner Ron Mellick said the city’s finances appear to be in good shape, as a result of following the advice of city management in years past and socking away money.
“We could have spent money on something else,” Mellick said, “but we wanted to make sure that when that rainy day did show up we weren’t caught short-handed.”
“The commission does have a rainy day fund, and we’re doing our best to not ever advocate that you’re going to have to dip into that,” Dougherty replied. “We may deplete the unreserved fund balance and have to figure out a way to put that back in over the next few years, but it’s our goal to not have to dip into reserves for operational-type expenses. We’d make operational corrections before we’d make that recommendation.”
Commissioner and Mayor Shaun Musil asked if that meant cutting services.
“Nothing noticeable right now,” Dougherty said. “I can’t promise what the summer will bring.”
Right now city management are waiting to see what the long-term effects on the local economy will be of COVID-19, considering the ongoing downturn in the agriculture market, the massive drop in the oil market, or declines in retail sales, all of which hurt the city, among other factors.
“We do have a very labor-intensive general fund budget,” Dougherty said. “You look at police and fire, and 90-some percentile of their budget is salaries. We have a lot of park space, we have a lot of parks workers, we have a lot of public works workers, that you can cut back on materials, but then we have people with nothing to do because they have no materials to work on. Or we can do a mixture of both. Right now I don’t think we’re there.”
In reviewing the city’s monthly financial statement, Finance Director Kim Rupp told the commissioners that revenues and expenditures for the month ending March 31 were up $335,000 at $2.6 million compared to last year.
Interest income across all funds was up $140,000.
“I realize in today’s environment that’s a bit odd to be talking about,” Rupp said. “We had $4 million in CDs maturing this month at an average rate of 2.6%, whereas a year ago it was $3 million maturing at a rate of 1.9%.”
There were no areas of significant revenue decreases, he said.
With sales tax collections representing a large chunk of the city’s revenue, Rupp reported that month-to-date general fund sales tax collections were $593,790, an increase of $78,990 or 15% compared to last year. He confirmed later in the report, however, that there’s a two-month lag in sales tax collections coming from the state.
Year-to-date collections are at $1.96 million, up $100,400 or 5.38%. The six-month average is 6.77% which is an increase of 4.54% when compared to a year ago, Rupp said.
In reporting the top 10 quarter-to-date sales tax collections by classification, Rupp said those were up $156,380 or 7.94%. The largest categorical increase was in supermarkets, convenience and liquor stores up 33%, and telecommunications up 26%.
“Just curious with grocery stores and the pandemic, what the increase will look like,” said Musil.
“We will be watching that,” Rupp said.
“I appreciate each month having this, and especially going forward,” Mellick said. “So we know what our finances are doing, and we won’t be surprised.”
Dougherty said city staff are working with Rupp to project current and future losses to city revenue from declines in everything from sales tax collections and the transient guest tax on hotel rooms to other income sources.
“The further we go along, we’re going to be losing court fines and forefeitures, things like that,” Dougherty said. “We’ll try to figure out what the effect of that’s going to be. The departments have all been tasked with finding 2020 cuts.”
Going into 2021, he added, city employees have been told to keep their budgets as lean as possible.
“We are in a good position. The city commission has adequately funded reserves, we aren’t living hand-to-mouth, or paycheck to paycheck. We have a good unreserved fund balance. That doesn’t mean we’re blind or oblivious to making cuts,” Dougherty said. “That means that if we make cuts … we do have the ability to absorb that and then recoup that at a later date.”
City commission meetings and work sessions on Thursday’s start at 6:30 p.m. Closed to public attendance by COVID-19, they can be viewed in real time on a livestream, or later, over the Internet at https://www.youtube.com/user/NexTechChannel.