Downvalley towns slash 2020 spending plans in wake of COVID-19 impacts
Healthy reserves in both Eagle and Gypsum will help mitigate financial hit from coronavirus
GYPSUM — As they review the initial figures reflecting the economic impact of the COVID-19 pandemic, Gypsum officials aren’t yet seeing a cataclysmic revenue drop.
But that doesn’t mean trouble isn’t on its way.
Last week, Gypsum Finance Director Mark Silverthorn told members of the Gypsum Town Council that numbers from March indicated that increased supply/panic purchasing offset the impact of having the Eagle County Regional Airport close a month early.
“But the figures through May will give us a better idea of what will actually happen,” Silverthorn said.
That’s why the town’s early financial analysis isn’t as optimistic as its early 2020 sales tax revenues. Right now, Gypsum is revising its budget to anticipate a 50% drop in sales tax revenues for the remainder of 2020.
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“We want to be pretty aggressive in our new outlook for revenues,” said Gypsum Town Manager Jeremy Rietmann. “We just all have to be honest with ourselves because it’s like throwing darts in the dark right now. We have our best estimates, but it is all speculation.”
$1 million cut
“Our goal is to provide reliable, quality services and also, at the same time, to adjust to the economic reality of the situation we are in,” Rietmann added.
In simplest terms, the town wants to cut spending to reflect a post-COVID-19 reality and keep its reserves intact to ride out the storm.
The town has a healthy fund balance to bridge the current economic situation. Gypsum anticipated having $3.9 million in reserve for 2020, but as of early April, reserves are around $4.2 million. That gives the community some leeway as it looks toward long term financial planning.
“It’s very difficult to know the duration of this right now,” Rietmann said.
Originally, Gypsum approved a $9.5 million operating budget for 2020. The revised spending plan has cut $1 million from the budget.
“We have gone through the entire general fund budget, line item by line item,” Rietmann said. “We hack away at anything leaving what we need to have, not what we want to have.”
The top line item on the “need” list is current staffing. Gypsum’s revised budget does not include layoffs or wage cuts.
“We believe our staff is pretty minimal for the amount of things we are covering right now,” Rietmann said. “We feel confident we can find savings in enough other places to weather this through. Right now, based on our projections and modeling, we don’t think staff cuts will be necessary.”
But the town has made significant cuts to its capital spending plans for this summer, including axing a $600,000 project to correct the dips along Gypsum Creek Road.
“We admit that road is not in great condition, but it is acceptable during tough economic times,” Rietmann said.
The town is also saving money by canceling the popular Gypsum Daze event this year. However, the cancelation was prompted by COVID-19 social distancing concerns, not because of a financial impact. Rietmann noted that the town is not out any money because of the cancelation because the entertainers scheduled to perform at the event have agreed to postpone their appearance until 2021.
Like Gypsum, officials in the town of Eagle are revising their budget.
“It’s really hard to predict what is going to happen,” said Eagle Town Manager Brandy Reitter. “We have never experienced this as a local government or as a state or a nation.”
Eagle, like municipalities across Colorado, is heavily dependent on sales tax revenue. With COVID-19, Eagle is planning for a 25% drop in sales tax receipts for 2020.
“But we have different scenarios planned out if we need to be more aggressive with budget reductions for the end of the year,” Reitter said.
Eagle’s initial action is to freeze all one-time expenditures including capital projects. “We are not canceling our projects because they are still a priority to the town,” she noted. “As soon as we turn a corner, we will start scheduling.”
Eagle also has a healthy reserve fund for 2020. Over the past few years, the town increased its reserves from 20% to 25%. Then, at the end of 2019 and during January and February of this year, unanticipated increases in sales tax further bumped reserves to around 37%.
“We had planned for a recession in the development of our 2020 budget, but we weren’t planning for this type of reduction,” Reitter said.
Eagle doesn’t anticipate layoffs or wage cuts. “We are freezing all new hires and we will not hire seasonal positions. The permanent, full-time staff will pick up those duties and we will have our hands full trying to maintain everything and keep the town looking nice,” Reitter said.
The COVID-19 shutdown has been a difficult time, Reitter noted, and now the gradual reopening process will present its own challenges.
“The community has really done its part. People are staying home and complying with the state order and wearing masks in public,” she said. “It has been nice to see everyone come together to help mitigate the impacts and it’s nice to see a light at the end of a very long tunnel.”