In the City of Aberdeen’s preliminary budget, revenue is approximately $1.6 million less than the previous year and capital projects take a hard hit, reflecting economic damage caused by the novel coronavirus.
The preliminary budget released Monday shows that appropriations from the city’s fund balance could go down by approximately $3 million. Last year, the proposed general fund request was around $19.3 million. The preliminary budget for the coming fiscal year, which begins July 1, is about $16.3 million.
A line in the preliminary budget estimates the pandemic to do approximately $555,000 in economic damage to Aberdeen.
Approximately $1.86 million in capital projects fund expenditures could be shed, as revenue from income and hotel taxes falls, along with other sources of money for the city. Capital projects fund expenditures would go down by approximately 60% from last year’s proposed $3 million appropriation, according to the preliminary budget.
The budget the city council worked on Monday is not finalized or even introduced, Mayor Patrick McGrady said, and will continue to be tweaked before its passage. Nobody on the city council has offered support for it, and the budget will be formally introduced to the council at a later date — possibly its April 27 meeting.
The hotel tax, which was expected to bring in about $700,000 last year, could be reduced by $200,000 in the coming fiscal year’s preliminary budget. Income tax projections are also anticipated to fall from $1.3 million to $1.15 million, according to the budget.
Highway user revenues, too, are expected to fall from about $700,000 to $640,000, according to the preliminary budget. That money is funneled to Aberdeen through the state, which draws on gas taxes to raise the cash, director of public works director Kyle Torster said at a Monday work session on the budget.
Through the anticipated reductions, one of the largest sources of Aberdeen’s revenues — real estate taxes — are projected to increase by approximately 2% from $9,042,430 to $9,211,41.
The preliminary budget also suggests mightily cutting money for repairing sidewalks to $100,000 — a nearly 94% decrease from last year’s allocation of about $1.6 million. One of the few capital projects that sees an increase in the preliminary budget is $33,000 for police cars.
McGrady said the capital projects were a logical place to cut back spending because of the limited duties the city performs. There are not many other places to realize savings as the city primarily pays its staff, supplies and maintains vehicles and sewer lines, and funds the police department, among other tasks.
“We are counting on significantly lower revenue from hotel taxes and from income tax revenue that is collected by the state,” he said.
Beyond income tax revenue, proceeds from the city’s taxes on entertainment, like ticket sales, is expected to be low, McGrady said. According to the preliminary budget, an approximately 45% decrease from $145,000 to $80,000 is anticipated.
City Manager Randy Robertson said that the budget prioritizes essential services that the city provides. A previous iteration of the preliminary budget included much more money than what made it into the preliminary budget released Monday.
"The numbers from the first pass were somewhere in excess of $3 million more than what we are now at,” Robertson said. "To my knowledge, the budget I present at the council tries to present most — if not all — of what the mission critical is.”
Robertson also noted that the city council could, through a budget amendment, adjust the numbers if the outlook becomes better or worse.
"This is totally unprecedented — this being budgets right in the middle of a pandemic,” Robertson said at a Monday work session of the city council. “We do not know what the light looks like at the end.”