$2,074,000 Budget Cuts Required
to Offset Loss of Sales and HOT Tax Collections

20/4/2020

The SPI City Council met for their mid-year budget review last Wednesday at 3:30 pm to discuss possible changes resulting from the COVID-19 crisis. [Click here to view the agenda.]

It's hard to tell how long the COVID-19 crisis will last, and it's difficult for Chief Financial Officer Rodrigo Gimenez to predict an outcome. According to Gimenez, the city has collected about $1 million in sales tax, which was a 10% increase, but he warned, "We also need to talk about budget reductions, though that's not something that people want to discuss."

"We know we will be facing a significant decline in revenue in March and April. (We must) develop a strategy to offset (these losses)," Gimenez said.

Gimenez recommended offsetting two months of near-zero sales and HOT tax collections with reductions of $2,074,000.

These cuts include freezing White Sands Beach access construction, reductions to staffing, including IT, beach patrol captain, police, and municipal court employees for 3 to 6 months.

Gimenez advises, "If you have an item this fiscal year, it's important from a financial point of view to spend it later. We need to focus on what we must pay right now. The goal is to preserve cash."

Mayor McNulty added, "We don't know where this is going to put us in June, July, or August. There are a lot of variables out there…We are starting to make a plan to get out of this...Our one hardship is that it's a lot easier for a city like Hidalgo, McAllen, Harlingen, Brownsville, who have a year-round, pretty fixed business cycle."

The next budget workshop is on June 17. "It might get pushed back to the end of June, so I (will have more data)," said Gimenez. "I'll get a better idea, the closer we get to summertime."