Baltimore is losing $20 million per month in revenue under social distancing restrictions that have shuttered businesses and forced people out of work to prevent the spread of the coronavirus, city officials said Friday.
The revenue loss is a combination of reduced income taxes as city residents have lost their jobs, falling tourism revenue, hurt by a lack of visitors during the outbreak, and declining highway user funds from people not gassing up their cars. About a third of the city’s general fund revenue, which it relies on to cover expenses, is “significantly at risk” because of the pandemic, said Bob Cenname, Baltimore’s budget director.
City officials released new details about the revenue shortfall as they prepare to close fiscal year 2020 and pass a budget for fiscal year 2021, which begins July 1. Baltimore officials previously announced the city expects to face a $42 million deficit for the current fiscal year as a result of the virus, which had killed more than 723 Marylanders as of Friday and sickened about 16,600.
Maryland has been under a stay-at-home order for nearly a month in an effort to slow the spread of the virus, and nonessential businesses have been closed since mid-March.
Of the city’s revenue streams hurt the worst, tourism, which includes hotel taxes, convention center fees and some parking meter funds, are the most “at risk,” Cenname said.
“We’re not seeing small declines on those sources. We’re seeing almost zero [revenue],” he said.
Compounding the revenue losses are increased expenses for coronavirus-related purchases including masks and gloves for front-line workers. So far, the city has spent about $20 million in coronavirus-related expenses, said Henry Raymond, Baltimore’s chief financial officer. That figure will likely increase to $45 million to $48 million by June 30, he said.
Baltimore officials expect to be reimbursed for those coronavirus-related expenses by federal stabilization funds being distributed to municipalities across the United States. Henry said he believes the stabilization funds will cover the $20 million spent so far.
City officials do not believe, however, the stabilization funds will cover all revenue losses caused during the virus, Cenname and Henry cautioned. Baltimore will have to make up that difference elsewhere, likely from city’s rainy day fund. The city has $145 million in the fund at present.
“The rainy day fund exists because it’s a backstop for a situation like this,” Cenname said. “It’s very likely, almost certain we’ll have to tap the rainy day fund for those lost revenues.”
Democratic City Council President Brandon Scott has called for the city to use $25 million from its rainy day fund to support small businesses, laid-off workers and homeless people as they cope with the fallout. Scott is running against incumbent Mayor Bernard C. “Jack” Young this year.
Baltimore’s proposed budget for fiscal year 2021 anticipates a $103 million shortage in revenue based on the assumption that serious restrictions on movement and gathering due to the virus could remain in place through September. If the city’s situation remains the same after that or worsens, finance officials would have to increase that expected shortfall, Cenname said.
To address some of that shortage, Young has submitted several proposals to the unions representing Baltimore’s workforce including furloughs, pay cuts and layoffs.
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Young’s spokesman said Friday the mayor wants to avoid layoffs. The administration has been having “productive discussions” with union leaders, he said.
Sgt. Mike Mancuso, president of Fraternal Order of Police Lodge 3, said Friday he has had no discussions with city administrators since the various options were suggested to city unions the second week of April.
“I imagine they are with the unions that are not front-line. Their people are getting full salaries to stay home and work or not work and FOP and Fire are getting COVID-19,” he said, adding that nearly 30 police officers have tested positive for the virus.
Earlier this week, The Washington Post reported that major metropolises including Baltimore; Austin, Texas, Boston and Detroit may struggle to access a $500 billion emergency lending program offered by the Federal Reserve in an effort to shore up local government budgets. The story said cities with fewer than a million residents would not qualify. Baltimore has fewer than 600,000 residents, according to recent census estimates.
Davis said Friday there are "no anticipated concerns or problems at all” with getting money from the federal government to assist with the pandemic. Baltimore will be seeking assistance directly from federal officials not from the state, he said.