CC 04-22-20 Oral Communications_Written CommentsCC 04-22-20
Oral
Communications
Written Comments
1
Cyrah Caburian
From:Viji <viji55665@gmail.com>
Sent:Wednesday, April 22, 2020 6:46 PM
To:City Clerk
Cc:City Council
Subject:Oral Comments CC Meeting 4/22/2020 _ please read
Attachments:Agenda - Tuesday, April 21, 2020.pdf
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the
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Dear Council Members,
On April 7th meeting, the City Manager provided a brief summary on financial impact due to COVID -19 and
stated more information will be provided on April 21st City council meeting. However, the City did not provide
the details yesterday. When the City's 80+ employees have been furloughed, the public should know what City
services are impacted due to this action, and how the City is taking care of its employees. More details should
be provided on shortfall of revenues and mitigation plans for current fiscal Year and next.
City of Campbell had an agenda item yesterday on " Receive an Update on Initial Fiscal and Budgetary
Impacts Due to COVID19 and Provide Staff with Feedback Regarding Recommended Strategies in Fiscal Year
(FY) 2019-20 and FY 2020-21 to Address Those Impacts"
The report presented by them is very detailed and informative and provides transparency on the current state
of their City's finances and the plans to mitigate this unprecedented crisis.
I would appreciate if the City of Cupertino brings a detailed report on April 28th. This would enable the public
and Council members to have a clear picture on City's finances and the council can deliberate and provide
guidance to the City Staff.
Attached is the Initial Fiscal and Budgetary Impacts Due to COVID-19 from City of Campbell.
Thanks,
Viji
City
Council
Report
TITLE: Receive an Update on Initial Fiscal and Budgetary Impacts Due to
COVID-19 and Provide Staff with Feedback Regarding Recommended
Strategies in Fiscal Year (FY) 2019-20 and FY 2020-21 to Address
Those Impacts
RECOMMENDED ACTION
That the City Council receive an update on the initial fiscal and budgetary impacts due
to COVID-19 and provide staff with feedback regarding recommended strategies in
Fiscal Year (FY) 2019-20 and FY 2020-21 to address those impacts.
BACKGROUND
Due to the rapidly increasing spread of the Novel Coronavirus Disease (COVID-19) in
many parts of the United States, California, and the Bay Area, the County of Santa
Clara Public Health Department issued its first public health order on March 9, 2020;
imposing a countywide moratorium on mass gatherings of 1,000 or more persons. The
City Manager, serving as the Director of Emergency Services, then proclaimed a local
emergency in the City of Campbell on March 12, ratified by Council resolution on March
17. A second County public health order followed this resolution on March 13, imposing
a countywide moratorium on mass gatherings of more than 100 persons and a
conditional moratorium on gatherings between 35 and 100 persons. A third public health
order was issued on March 16 for all residents in the County to shelter in place and for
all businesses and governmental agencies to cease non -essential operations at
physical locations through April 7, 2020. A f ourth public health order was issued on
March 31, extending the terms of the third-order through May 3, 2020, and clarifying the
definition of essential and non-essential services[1]. These orders mirror guidance from
the State of California and the Center for Disease Control and Prevention (CDC) as well
as public health orders of many states nationwide. Through the use of social distancing
and shelter in place orders, public health officials hope to slow the spread o f COVID-19
until a viable cure can be developed, tested, and administered.
While social distancing guidance and shelter in place, orders have started to have their
intended effect in slowing down the spread of COVID -19 cases nationwide, more
specifically in California. The effects have resulted in significant portions of the local,
state, and national economy being shut down partially or completely. For Campbell, this
has meant a direct and immediate fiscal impact on major City revenue sources such as
Sales Tax, Transient Occupancy Tax (TOT), Licenses and Permits, and Charges for
Item: 7
Category: NEW BUSINESS
Meeting Date: April 21, 2020
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Initial Fiscal and Budgetary Update: COVID-19 Page 2 of 12
Service. Before the County public health orders, staff was in the midst of preparing the
Fiscal Year (FY) 2020-21 Proposed Operating Budget and the 2021 -2025 Capital
Improvement Plan (CIP) for City Council consideration in June 2020. As such, this
report will provide the City Council with the following information:
• FY 2019-20 initial estimated revenue impacts due to COVID-19
• FY 2019-20 recommended strategies to address fiscal impacts of COVID-19
• FY 2020-21 initial estimated revenue impacts due to COVID-19
• FY 2020-21 recommended budget approaches and strategies due to COVID-19
• Potential state and federal aid for local governments
• Update on the operating budget and CIP development process
These are extremely negative events or occurrences that are impossibly difficult to
predict, unexpected, and unknowable. Each event is also unique in its characteristics
and impacts. Staff will continue to provide the Council with the best inform ation
available and informed recommendations to ensure fiscal stability given a number of
possible economic outcomes. Due to the unique nature of individual Black Swan events,
the magnitude and duration of COVID-19's economic impacts cannot be predicted with
absolute certainty.
DISCUSSION
FY 2019-20 Initial Estimated Revenue Impacts Due to COVID-19
As previously discussed, Santa Clara County and Campbell are under shelter in place
orders through at least May 3, 2020, a period equaling approximately 1.5 months since
the original shelter in place order went into effect on March 16. It is also possible given
the closure of many Bay Area school districts for the remainder of the school year, that
shelter in place orders could be extended through the end of June 2020. That would
equal approximately 3.5 months since the original shelter in place order went into effect.
As a result of shelter in place orders, local retail businesses and restaurants have either
closed temporarily or been reduced to limited service; local hotels have seen occupancy
rates and room rates drop drastically. The City recreation programs, and events have
been canceled, and City building permitting, and other revenue-generating services
have been temporarily halted, which has again had a direct and immediate fiscal impact
on major City revenue sources such as Sales Tax, Transient Occupancy Tax (TOT),
Licenses and Permits, and Charges for Service.
On March 3, 2020, before shelter in place orders and the full extent of COVID -19's
spread were known, staff provided the City Council with a mid -year financial status
update that showed improving General Fund revenues and the need to minimally
drawdown on General Fund reserves by approximately $398,000 in FY 2019 -20.
Estimated General Fund revenues at the time are shown in Table 1 below:
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Table 1 - Mid-Year General Fund Revenue Update
Revenue Category Proj YE 19-20 % of Total
Property Tax 16,932,000$ 29.57%
Sales Tax 15,891,400$ 27.75%
Charges for Service 5,444,903$ 9.51%
Transient Occupancy Tax 4,785,400$ 8.36%
Franchise Taxes 3,736,800$ 6.53%
Other Revenue 3,348,591$ 5.85%
Licenses & Permits 2,356,500$ 4.12%
Other Taxes 1,633,500$ 2.85%
Other Funding Sources 1,380,016$ 2.41%
Intergovernmental Revenue 915,470$ 1.60%
Investment Income 478,000$ 0.83%
Fines & Forfeitures 362,300$ 0.63%
TOTAL REVENUES 57,264,880$ 100.00%
Property Tax is the City's largest revenue source. Fortunately, staff does not expect it to
be negatively impacted by COVID-19 in either FY 2019-20 or FY 2020-21, even if there
are delinquencies or delays in individual taxpayer payments. The City is on a Teeter
Plan for property taxes in which it receives 100% of what is supposed to be collected
every fiscal year by Santa Clara County. The County is able to offer this guarantee in
exchange for keeping 100% of any penalty and interest charges on delinquent property
tax payments that would have been owed to the City. It is possible the State could
suspend Teeter Plans in the wake of COVID-19, but staff does not expect that to occur
at this time and expects Campbell to receive its full estimated share of property taxes in
FY 2019-20. The assessment roll for FY 2020 -21 is nearing completion by the County,
and staff does not expect that COVID-19 will have a negative impact on assessed
valuations yet. Thus, property tax revenues should still see normal 2% to 4% growth in
FY 2020-21. If the economic impacts of COVID-19, though, are prolonged, property
taxes could be negatively impacted starting FY 2021-22.
Sales Tax is the City's second-largest revenue source, and unfortunately, staff does
expect it to be negatively impacted by COVID-19 in FY 2019-20. Staff has performed a
business sector by sector analysis of sales tax revenues and used the assumption that
the level of current shelter in place orders will remain i n place through at least June 30,
2020. Using these assumptions, the City could lose approximately $1.46 million over
what it was expecting in sales tax revenues for FY 2019-20. Such losses could be less if
shelter in place orders are lifted or eased befor e June 30, 2020. However, on March 30,
2020, Governor Newsom approved Executive Order N-40-20, which allows small
businesses with less than $5 million in annual sales to defer up to $50,000 of their
Quarter 1 (Q1) 2020 sales tax payments until FY 2020 -21. The City should eventually
receive these payments, but such deferral could further decrease sales tax revenues
received in FY 2019-20. In total, 1,132 businesses within Campbell earned less than $5
million in annual sales in calendar year 2019. It is uncertain as to the total number of
small businesses that will defer their Q1 2020 sales tax payments, but this could further
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negatively impact FY 2019-20 sales tax revenues by up to $500,000. Staff, with this
assistance of the City's sales tax consultants, will monitor deferrals and provide Council
with a better update once actual payment data for Q1 is available in May 2020.
Charges for Service is the City's third-largest revenue source, and staff also expects it
to be negatively impacted by COVID-19 in FY 2019-20. The primary impacts are
expected to occur in Recreation programs and events since many have canceled or
postponed indefinitely. Other losses are expected in Community Development Zoning
Fees and Public Works Capital Project Overhead Offset Fees. Using the assumption
that that the level of current shelter in place orders will remain in place through at least
June 30, 2020, staff expects a loss of $1.67 million over what is was expecting in
charges for service in FY 2019-20. Such losses could be less if shelter in place orders
lifted or eased before June 30, 2020. And these losses are offset by $633,000 in salary
savings for temporary personnel in fee-based Recreation programs that have been
released from City service as of April 10, 2020, as well as other associated costs. And
while the Public Works Department will see decreased Capital Project Overhead Offset
Fees, it also expects to see approximately $150,000 in salary savings in vacant
positions that would normally charge their time to capital projects. Therefore, the net
revenue decrease in charges for service is approximately $886,000 after factoring in
associated savings.
Transient Occupancy Tax (TOT) is the City's fourth-largest revenue source, and staff
also expects it to be negatively impacted by COVID-19 in FY 2019-20. Despite the fact
that Campbell hotels remain open, all have experienced significant decreases in their
occupancy rates and room rates since shelter in place orders went into effect. And even
before those orders, hotels were seeing reduced occupancy rates due to many
businesses beginning to restrict commercial travel starting in February 2020. Thus,
using the assumption that the level of current shelter in place orders will remain in place
through at least June 30, 2020, that occupancy rates will equal 15%, and average room
rates will be decreased by 12%, staff expects the City to see a decrease in TOT
revenues of approximately $1.5 million in FY 2019-20. Occupancy rates for Campbell
hotels are normally above 80%, and staff contacted a number of local hotels to
determine their current occupancy and room rates.
Franchise Tax is the City's fifth-largest revenue source, and staff does not expect it to
be negatively by COVID-19 in either FY 2019-20 or FY 2020-21. Franchise taxes are
collected for electric, gas, cable television, garage, and telephone franchise agreements
already in place and are based upon consumer usage. They are normally fairly stable
even in economic downturns and usually increase annually per contractual agreement
or inflationary adjustments. Staff, though, will continue to monitor this revenue source
and provide Council with updates should it see a COVID-19 related decrease.
The preceding provided detail on potential decreases in the City’s five largest General
Fund revenue sources in FY 2019-20 due to COVID-19. However, staff also expects
approximately $1.13 million in decreases in other General Fund revenue sources in FY
2019-20 due to COVID-19. These include a $78,000 in decrease to Other Taxes, a
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$359,000 decrease to Licenses & Permits, a $213,000 decrease to Fines & Forfeitures,
a $38,000 decrease to Intergovernmental Revenue, and a $444,000 decrease to Other
Revenues which include Recreation Rental Income.
In total, net revenue losses in FY 2019-20 due to COVID-19 could equal approximately
$4.96 million or 8.7% across all General Fund revenue categories after factoring in
associated savings discussed previously. If these numbers should change up or down,
staff will provide City Council with an update.
FY 2019-20 Recommended Strategies to Address Fiscal Impacts of COVID-19
To address the potential $4.9 million revenue loss due to COVID -19 discussed
previously, the City Manager and staff have already implemented the following cost
containment strategies in FY 2019-20:
• Limited hiring freeze except for those positions which address public
health and safety – The City currently has vacancies in the following permanent
positions. Estimated annual total compensation costs (salary and benefits) are
shown in parenthesis:
o Recreation and Community Service Director ($331,000)
o Associate Planner ($196,000)
o Parks Supervisor ($214,000)
o Building Maintenance Supervisor ($206,000)
o Building Maintenance Worker ($158,000)
o Deputy City Manager ($251,000)
o Chief Building Official ($254,000)
o Recreation Specialist ($119,000)
o Assistant Engineer ($196,000)
o Police Officers (3.0 FTEs) – ($215,000 each/ $645,000 total)
In total, these positions equal approximately $2.57 million in annual salary and
benefit costs.
• Release of all temporary part-time employees as of April 10, 2020 – Most of
these positions are in the Recreation Department, but there were also temporary
part-time employees in all departments. As of this report, the City was averaging
approximately $83,000 in salary and benefit costs per payroll period for its part-
time temporary staff. With their release as of April 10, that will result in no part -
time temporary staffing costs for approximately 5.5 bi-weekly pay periods. Based
on historical averages, that would equal approximately $456,500 in salary and
benefit savings through June 30, 2020; assuming that no staff return before this
time. Most of those cost savings are captured in the $633,000 of Recreation
salary savings discussed previously and should not be counted twice. Still, staff
did want to provide more detail on these savings as an already enacted cost
containment strategy.
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• Employee use of leave time as of April 8, 2020 – Through April 7 and similar
to other Bay Area public agencies, the City of Campbell was providing paid
administrative leave for any employee not deemed to be performing an essential
service onsite or not able to work remotely offsite. Since that time, the City has
implemented a Limited Duration Teleworking During an Emergency Policy ,
which should allow more staff to remain productive offsite. For any employee
who cannot remain fully productive during the current shelter in place orders
through May 3 and who is not a necessary emergency worker, they are now
required to augment their hours with their accrued leave banks. This will not
decrease the City’s costs in FY 2019-20, but it will decrease the City’s long-term
liabilities for accrued leave. Nevertheless, the City must also now comply with
the recently passed Families First Coronavirus Response Act (FFCRA), which
creates two new emergency paid leave options in response to the COVID-19
global pandemic. These leaves are available to all employees under certain
circumstances and are not supported by Federal or State funding. Thus, the City
may see reduced positive impact on its strategy requiring employees to use
previously accrued leave time if not able to remain fully productive during current
shelter in place orders.
In addition to the strategies already implemented, staff also recommends the following
strategies in FY 2019-20 to mitigate potential revenue losses to COVID-19 and requests
Council feedback:
• Use of the General Fund Emergency Reserve – As of the fiscal year ending
June 30, 2019, the City had $5.59 million in its General Fund Emergency
Reserve. Per Section 20.V.A. of the Council Financial Policies, this reserve is
based on 10% of General Fund revenue. It will only be used in the case of dire
need as a result of physical or financial emergency as determined by the City
Council. Emergencies of physical nature include but are not limited to: natural
disasters such as earthquakes, fire, flooding, or severe weather -related damage,
resulting in significant loss of infrastructure or damage to City property requiring
material expenditures for repair or replacement of essential City equipment or
structures. e.g., police or other emergency vehicles, computer systems
infrastructure, City Hall, Community Center, service center buildings, and
equipment required to deliver essential city se rvices. Emergencies of a financial
nature would include but not be limited to material onetime statutory reductions in
revenue or unexpected/unbudgeted losses due to judgments or liability claims in
excess of the liability claims reserve balance. Mitigatio n of unexpected and
significant revenue losses due to a global pandemic and COVID-19 could be an
appropriate use of this reserve account, and staff encourages Council to consider
its use to maintain critical city services and cash flow requirements in FY 2019-
20. The decision to utilize this reserve does not have to be decided upon until
August 2020, when the City is closing its financial books for FY 2019 -20. At that
time or before, staff will request Council authorization to use the General Fund
Emergency Reserve, but only up to an amount that is necessary to preserve as
much of the account as possible for future needs.
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• Application to the Federal Emergency Management Agency (FEMA)
Community Disaster Loan (CDL) Program – The Stafford Act authorizes
FEMA to provide direct loans to local governments who have suffered a
substantial loss as a result of a major presidentially declared disaster . It can
demonstrate a need for Federal financial assistance in order to perform its
governmental functions1. Cities such as Campbell may apply for these loans up
to $5 million, and they are payable back over a five-year period, which can also
be extended to 10 years. While these funds would restrict the City’s future debt
capacity until they are paid back, they could provide the City with necessary cash
flow to meet its requirements and maintain critical services until the economic
impacts of COVID-19 subside. Staff will continue to explore the conditions of the
FEMA CDL program and return to Council at a later time if its use is needed and
seems fiscally prudent.
• Application to the Federal Reserve Municipal Liquidity Facility Program –
On April 9, 2020, the US Federal Reserve authorizes the use of $2.3 trillion in
loans to support the economy. $500 billion of this was set aside as a Municipal
Liquidity Facility program to help state and local governments manage cash flow
stresses caused by COVID-192. Details of this program are not yet fully available
and may only be available to those jurisdictions with populations over one million.
Staff will also explore its conditions and return to Council at a later time, if its use
is needed, allowable, and seems fiscally prudent. However, like the CDL
program, these funds need to be paid back and would restrict the City’s future
debt capacity until fully repaid.
FY 2020-21 Initial Estimated Revenue Impacts Due to COVID-19
A significant portion of the local, state and national economy have been partially or
completely shut down due to shelter in place orders. It can be reasonably assumed that
shelter in place orders will continue through the end of June 2020 ; the potential
economic impacts of COVID-19 are fairly well, although not completely established for
FY 2019-20. The economic impacts to FY 2019-20 have some level of certainty. The
impacts to FY 2020-21 have much less certainty since no one can predict when shelter
in place orders will finally be lifted, or whether the nation will see a re -emergence of
COVID-19 in the future, or how quickly the local, state, and national economy will
recover. With the strong state of the national economy and, more specifically, the state
and local economy prior to the emergence of COVID-19, some leading economists are
predicting a fairly quick economic recovery after the shelter in place orders have been
lifted, and the country begins to return to normalcy. Other economists are predicting a
recession that mirrors or is worse than the Great Recession of 2008 and has a slower
recovery starting in Spring/Summer 2021. For the time being, and in order to provide
initial estimated revenue impacts for FY 2020 -21, staff is assuming that COVID-19 will
1 FEMA CDL Program Fact Sheet - https://www.fema.gov/media-library-data/1549377354379-
306d5989736705cf2f921b802d01663e/What_is_Community_Disaster_Loan_2.4.19.pdf
2 Press Release Board of Governors of the Federal Reserve (April 9, 2020) -
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm
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push the economy into a recession that is at least as bad as the Great Recession of
2008; with a recovery starting in Spring/Summer 2021.
The Great Recession of 2008 started in September 2008 and negatively impacted the
City’s total General Fund revenues in FY 2008 -09 by 3.66% and in FY 2009-10 by an
additional 4.69%. The City began to experience a recovery in FY 2010-11. The following
percentage decreases were seen in these two fiscal years in the following General Fund
Revenue categories:
Table 2 - General Fund Revenue Losses Due to 2008 Great Recession
Revenue Category % Loss FY 2008-09 % Loss FY 2009-10
Property Tax 6.73%-1.36%
Sales Tax -6.86%-0.91%
Franchise Taxes 1.95%-1.32%
Transient Occupancy Taxes -20.50%0.81%
Other Taxes -33.24%-10.87%
Licenses & Permits -36.82%-32.67%
Fines & Forfeitures 5.01%9.64%
Investment Incomes -17.53%-62.39%
Intergovernmental Revenue -20.72%-0.55%
Charges for Service 1.52%3.59%
Other Revenue 11.36%-19.67%
Other Funding Sources 8.41%11.62%
TOTAL REVENUE LOSS 3.66%4.69%
Note: % Losses are in comparison to the prior fiscal year
As shown, property tax revenues were not initially impacted by the Great Recession but
did decline over time with their recovery, not starting until FY 2011-12. The last
recession was due to a housing bubble, and a potential recession from COVID-19 will
not be due to a housing bubble. Sales tax, transient occupancy taxes, other taxes,
licenses and permits, investment income, and intergovernmental revenue could
negatively be impacted by COVID-19 in FY 2020-21. If using the 2008 Great Recession
as a basis, this negative impact could be between $5.4 million to $7.1 million in FY
2020-21 when compared to staff’s pre-COVID-19 General Fund revenue estimates.
Nevertheless, these are only initial estimates, and much more data is necessary to
determine the true economic impacts of COVID-19 in FY 2020-21. As more information
is made available, staff will provide the Council with updates.
FY 2020-21 Recommended Budget Approach and Strategies Due to COVID-19
Since COVID-19 is a “Black Swan” economic event where the true impacts cannot be
known with absolute certainty, staff recommends implementing the following budget
approach and strategies for the FY 2020-21 Operating Budget and 2021-2025 Capital
Improvement Plan (CIP) and requests Council feedback:
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• Establishment of a carryover budget except for known salary & benefit and
contractual increases for necessary agreements – Until the impacts of
COVID-19 can be better known; staff recommends only appropriating enough
funds in FY 2020-21 to maintain current services. No other requests to increase
costs should be considered. Employee services costs account for 58% of the
City’s General Fund Adopted Budget in FY 2019-20, and no new personnel
should be added unless they are either cost-neutral or generate net revenue.
Additionally, while some of the City’s contractual agreements have programmed
cost escalators, staff will also review all contracts and determine whether or not
some services could be performed by City staff within their current capacity.
• Use of the General Fund Economic Fluctuations Reserve - As of the fiscal
year ending June 30, 2019, the City had $9.19 million in its General Fund
Economic Fluctuations Reserve. Per Section 20.V.C. of the Council Financial
Policies, this reserve shall be maintained, with a target of two months (16.67%)
of General Fund operating expenditures, to provide budget stabilization during an
economic downturn that could otherwise result in signif icant reductions in service
levels and/or organizational staffing. Economic conditions that could require the
use of this reserve include, but are not limited to: material decreases in property
or sales tax revenues due to economic downturns lasting at least a minimum
period of six months; loss of businesses generating significant proportions of
sales/use tax; reductions in revenue due to actions by state, federal, or other
governmental agencies or legislation. This Reserve shall not be less than $2
million. If the reserve balance falls below $4 million, or the City's five-year
financial projections indicate the reserve will fall below this minimum requirement
at any time during this period, City staff shall present to Council, by the following
year's budget adoption, a plan to return to the target amount within five years.
Mitigation of unexpected and significant revenue losses due to a global pandemic
and COVID-19 could be an appropriate use of this reserve account, and staff
encourages Council to consider its use to maintain critical City services and cash
flow requirements in FY 2020-21.
• Scaling Back of the Capital Improvement Plan (CIP) in FY 2020 -21 and
limited use of the Capital Improvements Reserve (CIPR) for Capital Projects
– Due to the uncertainty of COVID-19 and the need for staff to focus their time on
pressing operating issues, staff recommends only undertaking the most essential
capital improvement projects in FY 2020-21 that are needed to preserve public
safety and health or are part of a gran t matching or other external requirements.
The CIPR is funded by excess General Fund revenues, and staff recommends
removing or deferring any projects funded by it, which are not deemed essential
at this time and returning any remaining fund balance to the General Fund
Emergency, Economic Fluctuations, or other reserve accounts as deemed
necessary. As of the end of the fiscal year ending June 30, 2019, there was
$1.98 million in the CIPR account. Staff is currently in the process of
determining how much of this could be freed up for General Fund operating
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purposes and will return to Council at a future budget study session or City
Council meeting with exact figures.
• Return to Council in Fall 2020 with a budget update and recommended
corrective actions if necessary once the economic impacts of COVID-19 are
more fully known – The full magnitude and duration of the economic impacts
due to COVID-19 cannot be known at this time with absolute certainty. Thus,
staff believes that it is too soon to recommend significant budget reductions,
which could severely impact City service levels to the public, until such time that
the ongoing impacts of COVID-19 can be better understood. The use of the
strategies discussed above are appropriate and should allow the City to contain
costs and meet cash flow requirements in FY 2020-21. However, so that reserve
balances are not completely depleted and to ensure long-term financial stability
and creditworthiness, staff will also return to Council in October 2020 or before to
propose corrective budgetary actions if necessary. These actions may not be
necessary if the economy recovers quickly after the shelter in place orders have
been lifted. However, during upcoming budget study sessions with City Council,
staff will discuss several scenarios for reduced revenue levels in FY 2020-21 and
options to consider at various trigger points should revenue losses exceed
certain dollar ($) and/or percentage (%) thresholds. Staff is currently developing
those thresholds and options for discussion and consideration.
While staff is not requesting formal Council direction at this time, it again
requests feedback on the budget approach and strategies listed above.
Potential State and Federal Aid for Local Governments
The FEMA CDL Program and Federal Reserve Municipal Liquidity Facility Program
discussed previously; staff is also exploring the following avenues for federal and state
aid:
• FEMA Reimbursement under the Public Assistance Program (PAP) – This
program can provide for reimbursement of certain direct eligible expenses as
they relate to the City’s response to COVID-19. Eligible expenses may include:
o Any costs necessary to operate or equip our Emergency Operations
Center (EOC) to respond to COVID-19
o Disinfection of City facilities and disinfection of equipment and vehicles
due to COVID-19
o Contractual assistance on emergency management and control of
immediate threats to public health and safety in response to COVID -19
o Purchase and distribution of food, water, ice, medicine, and other
consumable supplies, to include personal protective equipment (PPE) and
hazardous material suits due to COVID-19
o Transportation of supplies and persons to respond to COVID -19
o Communications of general health and safety information to the public for
COVID-19
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o Reimbursement for state, tribe, territory and/or local government force
account overtime costs (OT) due to COVID-19
While it may take several years for the City to receive any PAP funds from FEMA
based on the timing and release of funds for previous disasters. FEMA has allocated
$468 million for California public agencies to respond to COVID-19, and staff will
submit an initial reimbursement claim shortly. The total amount of that claim has not
been determined at this time. Staff will continue to submit all allowable reimbursement
claims to FEMA now and into the future due to COVID-19.
• Coronavirus Aid, Relief, and Economic Security (CARES) Act – The CARES
Act is a $2 trillion relief package that was signed into law on March 27, 2020. Its
primary purpose is to support individuals and businesses affected by the COVID-
19 pandemic and associated economic downturn. However, the CARES Act also
contained a $150 billion Coronavirus Relief Fund to provide for payments to
State, Local, and Tribal governments navigating the impact of the COVID-19
outbreak. However, only jurisdictions with populations greater than 500,000 are
eligible for this aid, and it is up to individual states to determine how aid is
allocated to cities and counties under this threshold. The N ational League of
Cities (NLC) is advocating for direct aid to jurisdictions with populations less than
500,000, either as part of the Coronavirus Relief Fund or part of additional
appropriations, but no actions have been taken by Congress as of yet. At this
time, staff will explore whether and how the State of California will allocate these
funds to smaller jurisdictions, such as the City of Campbell. Nevertheless, the
CARES Act also contains provisions for additional Community Development
Block Grant (CDBG) funding as well as several other possible benefits to local
cities. Staff will continue to explore all funding mechanisms under the CARES Act
or future stimulus bills and return to Council to provide an update at a later time
in the near future once more information is known.
Operating Budget and CIP Development Process
The City’s fiscal year starts on July 1 and ends on June 30 every year. And no public
agency within California may spend public funds without the legal authorization to do so.
Thus, to continue services and projects, the City of Campbell must adopt its FY 2020 -21
Operating Budget and CIP by June 30, 2020. While COVID -19 and the logistical issues
of preparing a budget remotely under shelter in place orders have been challenging, the
City Manager’s Office and the Finance Department still plan to introduce an operating
budget and CIP on June 2 and seek Council adoption on June 16. The manner in
which staff gets there, though, has been modified to account for COVID-19 and is
shown in Attachment A – FY 2021 Budget Development Calendar.
Please note the following key dates in blue which are either regular City Council
meetings or study sessions in April, May, and June:
• April 21 –Council Meeting: Fiscal & Budgetary Update for COVID-19
• April 28 – Study Session: Strategic Priorities & Budget Solutions
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Initial Fiscal and Budgetary Update: COVID-19 Page 12 of 12
• May 19 – Council Meeting: Adoption of Master Fee Schedule
• May 19 – Council Meeting: Introduction of Business License Ordinance
• May 22 – Study Session: Operating Budget & CIP
• June 2 - Council Meeting: Adoption of Business License Ordinance
• June 2 - Council Meeting: Introduction of Operating Budget, CIP, & Gann Limit
• June 16 - Council Meeting: Adoption of Operating Budget, CIP, & Gann Limit
The time of the April 28 study session is still being confirmed, but it will be a remote
meeting. The time of the May 22 study session will be 10 a.m. to noon to discuss the
CIP and 1 p.m. – 4 p.m. to discuss the Operating Budget (location to be determined).
Please note that all dates and times are subject to cha nge due to operational or other
constraints caused by COVID-19. Staff will keep the City Council apprised should any
budget dates and times need to be changed. However, as previously discussed, the
City must adopt its FY 2020-21 Operating Budget and CIP by no later than June 30,
2020.
FISCAL IMPACT
There are no fiscal impacts associated with this report. Staff will return to Council with
additional budget strategies and a Proposed FY 2020-21 Operating Budget and 2021-
2025 Capital Improvement Plan (CIP) over the next several months.
Prepared by:
Will Fuentes, Finance Director
Approved by:
Brian Loventhal, City Manager
Attachment:
a. FY 2021 Budget Development Calendar
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