Foley to implement spending reduction measures

By Jessica Vaughn
Posted 5/11/20

FOLEY - With revenue numbers in for March and April, Foley officials have begun implementing spending reduction measures to try and meet the end-of-year budget.

“With the events as they have …

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Foley to implement spending reduction measures

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FOLEY - With revenue numbers in for March and April, Foley officials have begun implementing spending reduction measures to try and meet the end-of-year budget.

“With the events as they have progressed due to the pandemic, and with businesses shut down, it has a material effect on our revenue streams,” said City Administrator Mike Thompson. “The directorial staff have started analyzing all of that and we’ve put together a new year-end forecast based on what we believe we’re likely to hit in terms of our revenue streams and our expenses.”

On the expense side, three major spending areas have been looked at and adjusted: operational expenses, capital projects, and reductions in capital equipment.

For operational expenses, department directors were tasked to look at their individual department budgets and identify any reductions from the original budget to save money. Directors also looked at any capital equipment purchases that could wait until a later fiscal year. Employees identified all capital projects that could be delayed for a future year.

“We did not stop any capital projects that were already underway, and all projects that have been approved are still moving forward, which includes the repaving project,” Thompson said. “We also did not think the city would want to not move forward with any capital project that was partially funded by a grant, because let’s face it, that’s free money. So even though we’ve got to spend money, if a portion of the project is covered by a grant we don’t want to lose that. So neither a project that’s underway nor a project that’s tied to a grant is affected by this.”

Were the economy to continue to decline, or in the event of a resurgence of COVID-19, the city is prepared to look at these grant-funded capital projects and make necessary cuts at that time.

Thompson’s team believes these measures could save approximately $3 million dollars to the city on the expense side. On the revenue side, he says there’s no way to easily anticipate what the city will see over the summer. For March, which saw business closures halfway through the month, the city lost around $675,000, while April, a full month of closures, saw approximately $1 million in lost revenue.

“Over the summer I’ll be surprised if we hit any of our original numbers in revenue,” said Thompson. “People are probably going to be staying near home more, and possibly doing a stay-at-home vacation and that type of thing, so we think worst-case scenario is we might see a $6 million dollar drop in revenue for this fiscal year.”

He states the 2019-20 fiscal budget was about $3.5 million to the positive, so by implementing the $3 million cost saving measures he hopes the city will either come in with a flat or slightly positive budget, despite the anticipated low revenue.

“We have to implement these measures now,” said councilmember Ralph Hellmich. “If we wait for the actual numbers to come in it will be June, and it will be July before we start to see the true effect of the pandemic, and then it’s too late to make these adjustments without doing something drastic that really cuts into things. So by doing delays and taking these measures now, we’re being on the safe side.”

For more information on the City of Foley, visit https://cityoffoley.org/.