Coronavirus could eat into Fort Worth budget for several years
The recession that slashed an estimated $70 million from the city of Fort Worth’s spending power this year — resulting in furloughs and a massive hiring freeze — is likely to affect city services for at least three more years, but it is too early to know specifics.
Since early April, Fort Worth City Manager David Cooke has estimated that a downturn in spending related to the coronavirus outbreak would eat into the city’s general fund, public events budget and a special sales tax-funded program for the police department. The city’s general fund is likely to take in $40 million less than expected from sales tax while the police fund will be down $14 million. The public events budget will also take a roughly $14 million hit this year.
While Fort Worth received $158 million through the federal CARES Act stimulus package, that money cannot be used to replace lost tax revenue. Instead the city must use it to cover costs related to the coronavirus, such as overtime or personal protection equipment. A chunk of that money has been devoted to small business relief while other dollars are going to housing assistance.
Speaking specifically about the estimated sales tax impact to the general fund, Cooke said Fort Worth is likely to go without more than $21 million in 2021, $16 million in 2022 and $11 million in 2023. The city could be out nearly $130 million by 2027.
Before the coronavirus-spurred recession, the city’s budget office had assumed a steady 4% growth in sales tax revenue each year, but that growth is likely gone.
The recession likely won’t affect the city’s property tax revenue until 2022, when Cooke projects a $6.5 million hit. In 2023, however, the city will take in $43 million less than originally estimated, without an increase to property taxes.
It’s too early to know exactly how these shortfalls will affect upcoming budgets and city services, Cooke said. The city expects to fill this year’s gap through a number of spending changes that includes shifting some projects from cash to debt. Nearly 80 public events employees have been furloughed through August.
Cooke froze hiring for more than 300 vacant city jobs through the end of the year. The freeze may continue for some time as the city looks to spend less, he said.
While streets will continue to be repaired and trash picked up, Cooke said some new city services may be delayed or altered.
Design work was approved earlier this year for a community center in Northwest Community Park off Blue Mound Road in far north Fort Worth, but Cooke said construction may be put off. A library master plan calls for a new library in the far southwest part of the city, but that may have to be put on hold. The city’s newest libraries, the recently opened Golden Triangle and the Reby Cary Youth Library under construction in east Fort Worth, are likely to open as planned since they’re already in the budget, but Cooke said hours and staffing may be reduced.
“We’re going to plan across that three year horizon,” Cooke said. “So we can’t think short-term. These have to be cuts that are sustainable and last.”
A less severe estimate puts next year’s sales tax revenue gap at $15 million or $66 million total through 2027, based on a more rapid return to pre-COVID spending. But Cooke described this projection as “a little too optimistic” and said the larger revenue gap is more likely.
