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‘Ugly’: The Baltimore budget director’s word for the city’s financial outlook amid the coronavirus pandemic

Baltimore finance officials warned the city should expect to feel “a lot of pain” for years to come thanks to the coronavirus pandemic, as they delivered a bleak picture of the city’s budget Tuesday.

While Baltimore’s spending plan for fiscal year 2021 was based upon projections of a dramatic $100 million decrease in revenue as a result of the pandemic, even those predictions missed the mark.

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Baltimore is currently $30 million short of its already truncated revenue projection for the fiscal year that ends June 30, budget direct Bob Cenname told members of Baltimore City Council’s ways and means committee. It’s very likely the city will need to tap a rainy day fund to cover the deficit at the end of the fiscal year, he said.

“It’s very bad,” Cenname said. “It’s going to look ugly for a long period of time in my judgment,” he added.

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Hardest hit by the pandemic are Baltimore’s parking and hotel revenues, which have been decimated for months. Parking, which includes income from city-owned garages, parking meters, neighborhood parking permits and parking fines, typically brings in $6 million to $8 million per month. During the pandemic, revenue has averaged about $2 million monthly, Cenname said, telling the committee he “can’t overstate how bad the parking situation is.”

“We’re just getting crushed on parking revenue,” he said, “and I don’t think at this point some of this revenue is going to return.”

Hotel taxes, too, have dipped severely as occupancy has plummeted. Typically, the city generates more than $30 million annually in hotel tax revenue, but that figure has dropped to $12 million, Cenname said.

As the pandemic drags on, Cenname said, it seems less likely the revenues will ever fully return. The pandemic can no longer be regarded as a one-time disruption, he said.

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“Some of this revenue we’re talking about — it’s gone forever,” he said.

As revenues have dropped, city expenditures have skyrocketed as a result of the pandemic, creating a “really complicated and ugly picture,” Cenname said. More than $100 million from the federal CARES Act has flowed into the city, the majority of which has been spent or budgeted for COVID-related expenses.

But the city has spent another $60 million on such costs in anticipation of getting reimbursed by the Federal Emergency Management Agency. Unlike CARES Act money, the city has to pay up front for such expenses, then try to recoup the funds from FEMA via an application process that can take months.

The city has hired an accounting firm to assist with the process and to maximize the likelihood that its applications are approved. But it’s unlikely Baltimore will be fully reimbursed before the fiscal year ends, Cenname said.

Even if FEMA fully reimburses the city for every expenditure, Baltimore is still expected to end the year with at least a $3 million deficit, Cenname said.

Also, the city has exceeded its budgeted spending in areas that are not reimbursable. The police department has a $9.7 million shortfall, due in part to overtime, which is averaging $1.1 million to $1.2 million per two-week pay period.

The council slashed the department’s overtime budget in June, a cut Cenname called “overly aggressive.” To meet that goal, the department would need to spend only $1 million on overtime per pay period.

Police spending also has exceeded the fiscal year 2021 budget due to a proposed pay freeze that was not accepted by the Fraternal Order of Police union, as well as $500,000 in ongoing costs for the mounted police unit. The council has tried to eliminate the unit, but it remains “on call,” Cenname said.

The fire department also faces a $3.6 million shortfall that cannot be reimbursed with pandemic aid.

The current budget, proposed and executed by then-Democratic Mayor Bernard C. “Jack” Young, called for the elimination of two companies. But Young decided to wait for the results of a study of the department that already was underway before making the cut. That study is not complete, and the companies continue to operate.

City revenues increased in a few areas over the course of the pandemic, including traffic camera violations, which have generated $10 million more than budgeted thus far, Cenname said. However, the gain was unsustainable. As pandemic restrictions on where people could go eased, cars began to return to the roads. That kept other drivers from speeding and revenue has dipped, he said.

The city likely will have to tap its $138 million rainy day fund to balance its budget at the end of the year for the second year in a row, Cenname said. About $8 million was drawn from the fund to balance the fiscal year 2020 budget, he said.

Democratic Councilman Eric Costello, chair of the committee, suggested increasing the number of parking enforcement officers in the city to boost parking fine revenue. Those officers also can be of use when the city resumes enforcement of street sweeping violations, he said.

“This is a missed opportunity to generate more revenue,” he said. “No offense, but this is not a terribly positive fiscal outlook.”

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