Pandemic’s Economic Fallout Leads To Kansas City Budget And Service Cuts

From the City of Kansas City:

August 13, 2020

The economic slowdown caused by the COVID-19 pandemic has decreased sales and earnings tax revenue. Our Finance Department estimates that the city needs to cut $50 million from the current fiscal year’s budget.

The City Council has approved a plan that cuts the budget of most departments by 4.5% this year. Police and fire departments will cut 2.25%. Those cuts will total $23.6 million.

Cuts to positions and services (does not include police department):

• 53 vacant positions
• 13 filled positions
• Elimination of mowing for rural areas
• Reduced mowing for parks and boulevards, reduced tree trimming

The Public Works Department will reorganize its staff and structure to provide services with existing staff while eliminating current vacancies. Since nearly all Public Works employees shift to plowing duties during snowstorms, these cuts mean fewer staff members will be available for snow plowing. Management is exploring options for maintaining snow plowing at current levels. Public Works also will have fewer engineers for street projects and will outsource repair and replacement of traffic signs and signals. Also, spot sidewalk repairs will move from city staff to outside contractors.

Additionally, multiple departments will reduce contracts, training, travel, and internships. Residents and customers may see longer time frames to receive permits. View the entire list of impacted services.

That still leaves a budget gap of more than $26 million. To close the gap, the city expects to also:

• Draw at least $12 million from the Reserve Fund.
• Expand the current hiring freeze to save $4.8 million.
• Institute a one-week furlough for most city employees. This Resolution has gone back to the Finance Committee to consider changes to the scope of the furlough.
• Cut approximately $2 million more from Neighborhood and Housing Services. Those cuts are yet to be determined but will avoid a reduction in recycling collection.

Despite the bad news, it could have been worse. The city is able to responsibly take $12 million from the Reserve Fund, also known as the “rainy day” fund, which is in place for emergencies such as this. The Reserve Fund was built up over the decade since the last recession through careful planning and budget discipline. Additionally, the city benefits from its diverse revenue streams, because not all tax revenue has declined in the same ways. For example, the use tax revenue is up as more people order goods online, and the restaurant tax has not dropped off as much as expected, thanks to an increase in carryout business.

While we have received CARES federal funding, it can be used only for costs directly associated with responding to COVID 19, not to make up for budget shortfalls due to the economic crisis.

The finance director also warns that the budget for the next fiscal year will need to include an estimated $56 million in in additional budget cuts, based on current projections. Budget planning starts soon for the fiscal year that starts May 1, 2021.

Media questions can be directed to City Communications Director Chris Hernandez at 816- 787-1507.

This press release was produced by the City of Kansas City. The views expressed here are the author’s own.