HARLINGEN — City officials are downscaling projected revenue losses stemming from the economic crisis resulting from the coronavirus pandemic.
Two months ago, City Manager Dan Serna was projecting $1.1 million in losses, largely based on sales tax collections.
But May’s stronger consumer spending led him to downscale revenue losses to $319,751.
“ It’s much better than we anticipated,” Serna said Wednesday, referring to May’s sales tax report.
In April, Serna projected May’s sales tax collection would plunge 40 percent below last year’s revenues of $2 million.
But the state Comptroller’s Office’s new report shows May’s sales tax revenues came in at $1.75 million, down 13.7 percent from last year.
“ Obviously, we were relieved that sales tax revenues came in not as bad as we were projecting,” Mayor Chris Boswell said. “That’s encouraging.”
Now, Serna is projecting sales tax revenue losses of $71,276, or 0.39 percent of an estimated total of $18.4 million.
“ It is all a very fluid situation with the impact COVID is having on the economy,” Serna said. “The impact is very broad. It’s affecting people’s lives, livelihood, the economy, the medical sector.”
At City Hall, officials are monitoring the reopening of businesses that shut down from March to April as a result of federal guidelines and state and local orders aimed at reducing exposure to the COVID-19 virus.
“ I think we still have to be cautious and look at a couple more months to see how things are going with (business) openings,” Boswell said.
In April, the city’s Economic Development Corporation conducted a survey showing at least 47 businesses had stopped operations and 75 others had “experienced economic injury” while at least 382 workers had lost their jobs.
After Gov. Greg Abbott began allowing businesses to reopen in May, managers at local restaurants such as La Playa Mexican Café, Golden Corral, Pepe’s Mexican Restaurant and El Pato Mexican Food said they had put nearly all their employees back on the payroll.
“ Some businesses are opening and some people are slow to open,” Raudel Garza, the EDC’s chief executive officer, said.
At the EDC’s offices, May’s sales tax collection boosted confidence in consumer spending.
“ We’re glad the numbers aren’t as bad as people predicted but this thing isn’t over yet so we’re being cautiously optimistic,” Garza said.
For the fiscal year, Serna had budgeted $48.2 million in revenues.
With newly projected losses of $319,751, the city’s estimated revenues dropped to $47.9 million.
To help offset losses, Serna plans to delay the purchase of a City Hall generator along with an Emergency Operations Center storage room to cut capital expenses by $206,948.
Meanwhile, Serna’s projecting $482,158 in salary savings resulting from employee attrition and $243,541 in reimbursements from the federal Coronavirus Relief Fund.
Officials are counting on the city’s cash reserve war chest to help fund any emergency expenses.
Last October, officials launched the fiscal year with a $20.7 million fund balance.
As a result of expenses stemming from the pandemic, the fund balance dropped to an estimated $18.27 million.
Now, with the city’s $825,474 Catastrophic Emergency Fund Reserve, the fund balance is estimated at $19.1 million, enough to operate the city for 136 days.