City officials gird for major budget hit The Mesa Tribune | The Hometown Newspaper for the city of Mesa, AZ

City officials gird for major budget hit

City officials gird for major budget hit
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Crisis echoes Great Recession

By Jim Walsh
Tribune Staff Writer

Mesa anticipates losing millions of dollars in revenue from the recession triggered by the COVID-19 pandemic, forcing potential layoffs and delaying several major projects in East Mesa.

City Manager Chris Brady said he is trying to minimize layoffs of full-time employees by reassigning them to other positions or to Mesa Cares, the city’s COVID-19 response program, where their salaries might be picked up through federal funds.

“While these positions will be eliminated from departments, we are trying to do everything possible to find a place for them,’’ he said during a Council briefing last week, noting the layoffs would stem entirely from COVID-19’s fallout and are unrelated to the performance of employees.

The delayed projects would include the planned new southeast Mesa library and the new northeast Mesa public safety facility. Brady said planning for these facilities would move ahead, but construction would be delayed.

“We believe virtually all of these projects will be completed. We are trying to buy time right now,’’ Brady said. “We are very optimistic we are going to get through this. It’s going to be rough times in the near future, but we are going to pull out of this.’’

Budget director Candace Cannistraro described an estimated loss of more than $8.3 million in revenues during the 2020-21 fiscal year and a loss of more than $8.2 million in revenues during the 2021-22 fiscal year.

She outlined a loss of 23 full-time jobs and 39 part-time jobs in the hard-hit Arts and Culture Department, which includes major downtown facilities that have been closed to prevent the spread of COVID-19. Federal Centers for Disease guidelines call for the elimination of gatherings of 10 or more people.

Mesa reacted to that recommendation by closing such facilities as the Mesa Arts Center, the Mesa Museum of Natural History, the Mesa IDEA Museum and the Mesa Amphitheatre. She said foundations are seeking to raise funds to pay the salaries of employees.

Councilwoman Jen Duff, who represents downtown, sought to save as many jobs as possible in the cultural programs, hoping that the facilities can be reopened as soon as possible.

She said downtown businesses have been devastated by the closed facilities and the COVID-19 precautionary measures and that 20 years of progress in restoring downtown is being lost.

Cannistraro said she does not anticipate eliminating any full-time positions in the Parks, Recreation and Community Facilities Department but that 399 part-time positions would be scrapped.

She also anticipates no layoffs of full-time positions from Library Services but she said 17 part-time positions would be abolished.

“We had a really good fall. That is cushioning the impact of the recession right now,’’ Cannistraro said.

She said Mesa also benefited greatly from receiving $7.5 million in shared revenue from the state and otherwise would have been facing a $16 million drop in revenue this year.

But it remains unclear how Mesa’s sale tax revenue will be impacted by the early cancellation of the Cactus League this year. She has described revenues generated from the league in past years as “a second Christmas’’ for the city.

She said the city received $19.7 million in sales taxes last March, a boon directly tied to the Cactus League. Mesa will not know the reduction of sales tax revenues until May.

For that reason, Cannistraro said she will evaluate the city’s financial picture every 30 days and report back to the council on what measures are necessary.

Also suggesting that the recession for Mesa and virtually all Arizona municipalities could be far longer is the impact of lower state-shared revenues – a collection income tax, sales tax and other revenues doled out by the state to cities.

Municipalities base a significant part of their budgets on that revenue. What they get for this fiscal year came from income tax allotments based on the state’s personal income tax haul from two years prior.

That means municipalities in two years will be receiving shared revenues partially based on the state’s 2020 income tax revenues, which are expected to plummet with hundreds of thousands of job losses.

Brady said the city plans to adopt a budget similar to last year, but to make adjustments based upon how the economic picture changes.

Mayor John Giles also sounded an optimistic tone amid the budget gloom after council member Jeremy Whittaker compared the present recession to The Depression in the 1930s and questioned whether the city should continue building the Arizona State University@mesacitycenter project.

“I believe it is unfair not to consider every possible project,’’ Whittaker said, citing the possibility of layoffs.

Whittaker has consistently opposed the project since the council voted, 5-2 to approve it in June 2018.

He has voted against every expenditure related to ASU and was the lone opponent when the council recently voted to approve the remaining $48.8 million needed to complete the building.

But Giles and other city officials quickly rejected his idea, saying the city has a contract with ASU and with a construction company that is building the $63.5 million facility, which includes another $10 million price tag for ASU.

“This is a conversation that hasn’t stopped for 2 ½ years. People are looking for political opportunities to attack the project,’’ Giles said. “I think one of the biggest challenges is not to over-react and having a deeper hole to climb out of.’’

He also said that halting the project would not only expose the city to penalties, but also cost many construction workers their jobs.

“I think its impact is a downward spiral,’’ Giles said.

Giles was the project’s staunchest supporter, believing that it is needed to boost downtown redevelopment and to improve academic opportunities.

City council Dave Luna, also a big supporter of the ASU project, noted the project is not scheduled to open for 2 ½ years, when the COVID-19 crisis probably will be over.

“I think the ASU project will be crucial to our recovery,’’ Luna said.

Giles said he hopes that Mesa can gradually re-open pools and other facilities as the financial crisis lifts this summer, even though the full summer program is not possible.

“In addition to the really scary plans, I’d like to have some optimistic plans. Maybe reality will lie somewhere in the middle,’’ Giles said.

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