Saturday, April 25, 2020
Ninety-six percent of Boulder businesses have been impacted by COVID-19, according to a recent citywide survey, and 75% have laid off staff, reduced pay and/or cut hours as a result of drastically altered operations and shrunken or nonexistent revenue.
The extent of damage to the city’s sales tax-reliant budget is still unclear, but already, key funding sources are experiencing double-digit declines. More details will be revealed at Tuesday’s council meeting.
It’s not likely to be a rosy picture: The snapshot of widespread destruction comes from March, the early days of which were business-as-usual. Boulder County’s first coronavirus case didn’t hit until mid-month, and stay-at-home orders (with their associated business closures) weren’t issued until March 23.
April’s full-month shutdown likely wreaked even more devastation on businesses, the hardest-hit of which may be unable to fully reopen for months to come as continued social distancing is needed to stave off deadly surges. Already, more than 100 businesses have permanently closed, according to survey responses that represent just a fraction of the city’s 7,000 businesses.
“As the health emergency persists,” staff wrote in notes to council, “it becomes more likely that businesses may need longer periods and greater assistance to reopen.”
(Almost) no immunity to economic impacts
The business impact survey was conducted April 1-10 in English and Spanish. More than 5,000 businesses received the survey and 1,248 responses were remitted, a 23% response rate. Thirty-one percent of businesses were considered essential under Colorado’s stay-at-home orders, now extended in Boulder County through May 8.
Nearly all reported some change, with 79% reporting “significant” impacts from COVID, including decreased revenue, difficulty paying rent or utilities and difficulty meeting payroll. These issues were consistent across the board, regardless of size.
More than half of businesses are still operating, though 94% report a change in the way they run day-to-day operations. One percent, or roughly 120 businesses, permanently closed due to COVID; all had fewer than 50 employees, according to the data.
Unsurprisingly, the survey found that restaurants, non-food retailers and “businesses in the fitness, personal service, hospitality, outdoor or child care and educational” fields were more likely to have made operational changes. Others, including grocery stores, tech companies, repair and maintenance shops and some non-grocery retail, relayed difficulty filling inventory.
To survive the fallout, three-fourths of businesses changed staffing levels, hours or wages. Sixty percent of business owners said they believe the reductions will be temporary; 4% said they were permanent.
Layoffs are likely to grow locally, staff warned in notes sent to council ahead of Tuesday’s meeting.
“Based on the growing number of initial unemployment claims being filed across the state and in Boulder,” they wrote, “it is likely that more businesses have (or will be) reducing staff since the survey was completed.”
COVID depletes city coffers
Business losses will hit the city budget hard. More than one-third of Boulder’s revenue comes from sales and use tax — a number that jumps to half when utility payments are excluded.
The current “best-case” scenario is one in which Boulder brings in $28 million less than last year. Although financial staff pledged to present “more dire” projections for revenue decline, none were included in notes to council ahead of its next meeting.
Sales and use tax receipts from March were also not provided. Reports were remitted April 20 and will be shared Tuesday, staff wrote.
High-level data from March showed precipitous drops in revenue from several sources that pay into the general fund, including:
- Admission charges and activity fees: down 74%
- Parking-related fees (permits and meters): down 40-96%
- Municipal court charges (fines, penalties, violations): down 34-44%
Under current modeling, the general fund could come up short by $15.5 million. Furloughs and the hiring freeze will save a combined $6.4 million, half of which comes from the general fund.
There are $6.5 million available in reserves, plus some potential carryover from excess revenue collected last year. Sales tax brought in $4.8 million more than expected; business and construction combined for $4.2 million above budgeted use tax.
Every department has been asked to reduce its 2020 budget by 10%. Functions will be classified by how critical they are to city operations — essential, important, helpful or amenity — before cuts are recommended by the executive budget committee.
Muni won’t take money this year
One reduction has already been pledged: Staff shared via email Wednesday that Local Power — Boulder’s effort to wrest control of the electric utility from Xcel, more commonly known as the muni — won’t be requesting any general fund cash this year.
“We’ve examined our budget and determined that the project would not need these funds in 2020,” project spokesperson Emily Sandoval wrote.
Unspent utility occupation tax funds, totaling roughly $3 million, allocated for 2018-2019 will be rolled over, as planned. More than $5.36 million is projected to be spent on Local Power this year.
The muni borrowed $1.45 million from the general fund between 2012 and 2017; money that will be repaid if/when the utility becomes operational. Current plans call for $1.6 million to be drawn in 2021, which would be repaid with revenues from 2022 UOT collection. That revenue may also be used to repay 2012-2017 loans, staff said last week.
City council meeting 6 p.m. Tuesday, April 28. Watch online or on Channel 8.
— Shay Castle, email@example.com, @shayshinecastle
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