Burlington Coronavirus: Town Facing Millions Of Lost Revenue

BURLINGTON, MA — The Burlington town government likely to lose millions in revenue due to the new coronavirus outbreak, Town Administrator Paul Sagarino said Friday. The impact will begin in the current quarter, with missing meal and hotel taxes, and worsen in Fiscal Year 2021, with lost state aid, motor vehicle excise taxes and more.

The town has put a spending freeze in place for the fourth quarter of Fiscal Year 2020, Sagarino said, but is not planning to revise the Fiscal Year 2021 budget, yet.

For the current quarter, the spending freeze is not absolute — some departments, like the Board of Health, are spending more than usual — but the town is looking to save money wherever available.

"People should have funding available for things they were going to do, that they can't do," Sagarino said.

Sagarino said that due to conservative budgeting, the town will meet revenue estimates for the year, even without the nearly $1.2 million in meal and hotel taxes it would earn in a strong quarter.

The longer the crisis goes on, however, the more revenue is at stake. Another $1.2 million in meal and hotel taxes could be lost each quarter, and a 10 percent cut in state aid would cost the town another million. Motor vehicle taxes, building permits and water revenues are also likely to drop in a continued shutdown.

But almost a full year of planning has already gone into the budget process, Sagarino said, and it's still unknown what will happen with state (and federal) aid, how long the shutdown will go on, and how quickly the economy will recover. So the town will be asking town meeting to pass the Fiscal Year 2021 budget as planned, then make cuts later as needed.

"What we're trying to do is move forward as we planned," Sagarino said. "If we have large expenditures, we'll hold them off until September, and hopefully by then we'll have more information."

The budget foresees a 3.5 percent operating increase over the current fiscal year.

"We're trying to have a little more time to evaluate things before we have to blow it up," Sagarino said. "We have great finances. We consistently spend less than we're able to. At a minimum we should be able to go forward before we have to devastate things."

If need be, town officials will go back to the September town meeting and ask to make cuts then. Of course, these plans depend on town meeting approval, the town administrator noted.

Spending that can be put off includes funding the town's OPEB liability, or future benefits for retirees.

"We fund our OPEB liability. That's not required," Sagarino said. "If we get the approval, we will not wire that money out. Then, if at September town meeting, things look worse, we'll bring that to zero."

The same goes for other expenses: passing the Fiscal Year 2021 budget will give department heads time to find the "least harmful cuts" to bring to town meeting in September or January, if necessary. Taxes will not be impacted in Fiscal Year 2021 by the crisis, Sagarino said.

"We're paying attention to the perils, but we need to keep planning," he said. "The town will go on."

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Christopher Huffaker can be reached at 412-265-8353 or chris.huffaker@patch.com.