CC 04-07-20 #1 COVID-19 Update_Late Written Communications1
Cyrah Caburian
From:Viji <viji55665@gmail.com>
Sent:Tuesday, April 7, 2020 6:46 PM
To:City Clerk
Cc:City Council
Subject:Agenda Item #1 Oral Comments OR Oral Communications.
Attachments:CityOfSanJoseBudgetaryImpacts-COVID-19.pdf
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Hi Kristen.
Please read my oral comments for Agenda Item #1. If public comment is not allowed for Item#1, then read it during Oral
Comments. Thanks . Appreciate your dedication to the City during this crisis.
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Dear Council Members,
I sent oral comments to the last council meeting inquiring the financial impact of COVID‐19 to our City. Council Member
Liang Chao suggested to bring an agenda item on the same and the City replied that they will not be ready to bring the
financial impacts on April 7th and did not provide any timeline on when the City will be ready to provide a report to the
Council and the public.
However, I would like to bring to your attention that City of San Jose had their council meeting today and they had an
agenda item on the Budgetary Impacts from COVID‐19 and their approach on how those impacts will be addressed in
FY2019‐20 and FY2020‐21. The City’s finance dept said they expect financial crisis and shared the expected revenue
shortfalls this quarter and next fiscal year. For example, they expect a sales tax reduction of 45% just for this quarter
among other revenue shortfalls.
The City of San Jose plans to come back again at the end of April with another report to the City Council on reducing
existing expenditure appropriations for the remaining months of this Fiscal year and resolving revenue shortfalls for the
next fiscal year. It was a very informative presentation and it provides transparency on the City’s finances and I
appreciate their proactive ability to share it to the public early on in this crisis.
So, my request again to the City Manager and the Council is to bring the Financial Impact of COVID ‐19 for the remaining
months of this Fiscal Year and next Fiscal Year at the next council meeting. If a large City like San Jose can bring a
presentation today, our City should be able to bring a report on the budgetary impacts as well. I have attached the City
of San Jose’s Budget Impact Presentation for our council review.
It is clear that we cannot maintain status quo and keep spending business as usual. It is the City’s responsibility to be
forthright in informing the public the financial stability of our City during the crisis and the steps the City plans to take to
mitigate the impact.
2
Thanks,
Viji
Cupertino Resident
1City Council Meeting –April 7, 2020; Item 3.3Estimated Budget Impactsof COVID-19Presenter: Jim Shannon, Budget Director
2Impacts to the Economy•Shelter-in-place results in a broad suspension of economic activity•Demand for Unemployment Benefits (March) has reached historic levels and is anticipated to continue increasing•Recession has likely already began, or will begin within the next few months; depth and length of recession are unknown•Return to “business as usual” will likely take a long time and could look different the pre-COVID conditionsEstimated Budget Impacts of COVID-19
3•No models exist to accurately forecast this situation and existing data trends not relevant going forward•Assuming the steep decline of economic activity due to COVID-19 generally continues through the fiscal year•COVID-19 response continues into July, but 2020-2021 fiscal occurs within recessionary conditions•Estimated revenue impacts currently forecasted could be slightly better or tens of millions of dollars worse–2019-2020: -$45 million; Declines anticipated March-June–2020-2021: -$65 million; 8.6% drop from 2019-2020• “Great Recession” dropped 2.9% and “Dotcom Bust” dropped 2.6%Estimated Budget Impacts of COVID-19Forecast Changes
4Significant General Fund Revenue Impacts•Property Tax:No impact in 2019-2020; 2020-2021 drop (-$3.5M) •Sales Tax:–2019-2020: First two quarters already received with solid growth; 3rdquarter (Jan-March) anticipated to drop 10%, 4thquarter anticipated to drop 45% (-$27M) –2020-2021: Low levels of activity persist in 2020-2021, with negative year-over-year growth (-14%) until 4thquarter of 2020-2021 (-$41M)–Overall assuming five quarters with negative growth averaging 17%; Great Recession had seven quarters averaging 11% declines–Internet sales included in the above (eBay omitted)Estimated Budget Impacts of COVID-19
5Significant General Fund Revenue Impacts•Transient Occupancy Tax:2019-2020 assumes 15% occupancy rate for March-June (-$7.2M). 2020-2021 drops 30% (-$5.8M)•Business Taxes:In 2019-2020, 75% already received. Assumed last quarter drop (-$6M). 2020-2021 drops almost 10% (-$7M) •Utility Taxes:In 2019-2020, 70% already received. Assumed last quarter drop (-$2M). 2020-2021 drops 3% (-$2.7M) Estimated Budget Impacts of COVID-19
62019-2020 Resolving General Fund Shortfalls•Return to City Council at the end of April to reduce existing expenditure appropriations–Personal services vacancy savings –Reductions as feasible for non-COVID-19 non-personal/equipment expenditures–Suspension of Departmental, City-Wide Expenses & General Fund Capital projects not started•Proceeds from Revenue Capture Agreement with eBay, Inc.–City received State disbursement for Oct-Dec activity in February (City’s portion totaled $7.3M)–2019-2020 revenue may total $15-20M, but is still being evaluated•Evaluate the use of reservesEstimated Budget Impacts of COVID-19
7•Pay down debt–Refunding of outstanding City Hall lease-revenue bonds•Revenue Capture Agreement–Revenue associated with agreement not previously captured and assumed ongoing; estimated revenues still under evaluation•Implement ongoing service level reductions–Reduce, eliminate, and reprioritize services–Will work to minimize layoffs, but positions will be eliminated–Tier I reductions will be implemented with budget adoption–Tier II reductions will be identified for potential action later in the fiscal year if conditions worsenEstimated Budget Impacts of COVID-192020-2021 Resolving General Fund Shortfalls
82020-2021 Approach to Balancing General Fund•Consideration of 2019-2020 one-time items–Evaluate those programs and services in the 2019-2020 Adopted Budget listed as one-time, but have been funded on a one-time basis for a number of years •Utilize Budget Stabilization Reserve, 2020-2021 Future Deficit Reserve, and other one-time sources–Budget Stabilization Reserve totals $32M and Future Deficit Reserve totals $10.9M•Reductions will require hard decisions; assessing the equity of service impacts across our diverse community is essentialEstimated Budget Impacts of COVID-19
9Special and Capital Fund Impacts•Airport Funds–Significant reductions anticipated and cost containment measures implemented in 2019-2020 to generate $10 million; deferment of 19% of capital program expenditures to 2020-2021–Federal stimulus package for airport sector includes $10B to prevent, prepare for, and respond to COVID-19 •Transient Occupancy Tax Fund–2019-2020 drop of $10.5 million; 2020-2021 drop of $8.6 million–Significant impact to Team San Jose operations and facility capital improvements, cultural grants, and San Jose Convention and Visitors BureauEstimated Budget Impacts of COVID-19
10Special and Capital Fund Impacts•Development Fee Program Funds–Building, Planning, Citywide Planning, Fire and Public Works anticipated to experience at least a 30% activity drop in 2020-2021; reserve levels, costs, and fee revenue being re-evaluated •Construction and Conveyance Tax Funds –Funds the Parks and Community Facilities Development, Library, Public Safety, Service Yards, and Communications Capital programs; expecting drop of $22 million over five years•Construction Excise Tax Fund (Traffic Capital Program)–Anticipated to fall $1 million below 2019-2020 budget; expecting drop of $22 million over five yearsEstimated Budget Impacts of COVID-19
11Community and Employee Engagement–The release of the 2020-2021 Proposed Budget Operating Budget pushed back to May 8, 2020 (new budget calendar forthcoming)–Community and employee communication will continue to be important, but more challenging in this environment –The format and timing of City Council and Community Budget Study Sessions will need to change–City departments will actively engage their employees on how to solve our shortfall–Employee suggestion form is available on the intranet page of the City Manager’s Budget Office for submittal of individual ideas (anonymously, if desired)–City Manager will conduct a series of virtual town-hall style meetings with all City employeesEstimated Budget Impacts of COVID-19
12Appropriation Actions to Support COVID-19 Response–Establish a COVID-19 Emergency Response appropriation in the Emergency Reserve Fund in the amount of $14.4 million–Accept grant funding of $3.9 million from the State of California for an Emergency Homeless Funding Grant– Transferring in $10 million from the General Fund’s 2019-2020 Ending Fund Balance Reserve (expect to replenished prior to June 30)–Reallocating $500,000 from the Emergency Reserve Fund Unrestricted Ending Fund Balance–Future actions will recommend the execution or ratification of agreements related to COVID-19 emergency services that have previously commencedEstimated Budget Impacts of COVID-19
13City Council Meeting –April 7, 2020; Item 3.3Estimated Budget Impactsof COVID-19Presenter: Jim Shannon, Budget Director
1
Cyrah Caburian
From:City of Cupertino Written Correspondence
Subject:FW: Furlough of Part-Time Employees; Postponement of $50,000
From: Connie Cunningham <cunninghamconniel@gmail.com>
Date: April 7, 2020 at 8:13:49 PM PDT
To: City Council <CityCouncil@cupertino.org>
Subject: Furlough of Part‐Time Employees; Postponement of $50,000
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Dear Mayor, Vice‐Mayor, Councilmembers and City Manager:
COVID‐19 :
Even though the City Manager had mentioned in the March 31, 2020 meeting that salaries make up the
larger part of the City budget, I was taken aback by the announcement of a cut of part‐time 80
employees that has already happened. That is 27.5% of all the staff. Has that much work disappeared in
the 12% lessening of revenue?
Item 10:
With a 12% lessening in revenue, a 20% cut in budget is strikingly large, especially when announced just
minutes after stating that we were postponing an Emergency Assistance donation of $50,000 until we
can have more meetings and obtain more information. As I had said, I think it is a good plan for
including other Cities, businesses, non‐profits and other stakeholders. However, $50,000 as a way to
support any residents who have been left out seems an appropriate use.
I hope that the City is planning to hire back these employees soon. This is an addition of a number of 80
of our own Cupertino employees to the unemployed at a time when over 1,000,000 people are
unemployed in California. I would have thought that the reserves that the City has put aside for the
purposes of dealing with economic downturns would have provided some breathing room for this major
decision.
Sincerely,
Connie Cunningham
Concerned Cupertino Resident