As the economic cost of COVID-19 continues to come into focus, cities are preparing for various sizes of budget shortfalls.
According to City Administrator Chris Searcy, Enumclaw isn’t looking too shabby — at least compared to other cities like Kent, which reports have said could face a $9 million deficit.
But nothing is set in stone, Searcy warned, and how Enumclaw fares in the future will likely be determined by how soon Gov. Jay Inslee begins re-opening the Washington state economy and how quickly residents are willing to jump back into social activities.
“It’s so hard to guess what the actual impact is going to be,” he said in an April 23 interview. “The state money that they give to us, it’s about two months after the actual economic activity occurred. We’re not going to know until the end of May what March was, and of course, March wasn’t a full month of impact.”
All together, Enumclaw is estimating somewhere between a 5 and 15 percent budget shortfall. With a general fund of just about $11 million, that roughly translates to around $500,000 to $1.5 million.
“That’s kind of similar to what I’ve heard other cities mention,” Searcy said. “If you don’t have car dealers, you’re not probably as sales tax dependent as we are, but we’re not as sales tax dependent as Tukwila is, that has the mall.”
Likely cushioning any deficit in Enumclaw’s budget is that while Cole Street businesses shut up shop soon after Inslee ordered non-essential businesses closed on March 23 , others stayed open — and maybe even saw some increased sales.
Searcy specifically mentioned the Gateway hardware store and Tractor supply, rival businesses that face each other across Griffin Avenue.
“Every day looks like a weekend day there,” he said. “How much have their sales increased?”
Searcy also brought up QFC and Safeway, which likely saw increases in sales for taxable items like toilet paper.
“With a total of about $2.5 million in reserves in the general fund, we can make it through,” he continued. “The question is, what type of recovery is it going to be?… Are things going to bounce back quickly, as far as social activity and economic activity?”
If it turns out Enumclaw’s budget shortfall is larger than expected, or the economy just doesn’t pick up fast enough, Searcy said the city is looking at ways to tighten its belt, which includes not hiring seasonal staff for summer recreation programs or paying staff to travel.
But “if we really have to look at reducing our expenditures over a long period, we’re really talking people,” he continued. “The whole purpose of having a really strong reserve and preparing for a recession is to avoid doing that knee-jerk, draconian reaction of layoffs and freezes and things like that.”
OPENED CONSTRUCTION WILL ALSO HELP
Enumclaw Mayor Jan Molinaro recently co-penned a letter with multiple other South King County mayors requesting Inslee to allow commercial and residential construction projects to resume.
“The Federal government has bailed out specific industries, reimbursed states for expenses and even provided relief for cities over 500,000 in population. To date, the rest of us are on our own to fund critical services which means our local economy is vital is we are going to continue to function as local government,” the April 22 letter reads. “Re-opening construction, while it won’t save our entire economy, it will provide some relief to local government.”
On April 24, Inslee announced a plan to get crews back to work on “low-risk” projects already started when COVID-19 descended on Washington, though not all work will be permitted. Construction crews will still need to adhere to social distancing guidelines, and companies will have to provide additional protective gear.
According to Searcy, restarting construction projects in Enumclaw has several financial benefits for the city through impact fees, permit and plan check fees, new utility connections, construction sales taxes, Real Estate Excise Taxes (REET), and increased assessed home values when property tax season comes around.
He added that there are roughly 13 residential projects and seven commercial projects on the books right now.
Mayor Molinaro said that construction is part of a long and complicated economic chain that affects a wide range of Eumclaw’s local economy.
“Having a complete freeze on homes that already have been sold creates stress to those home buyers right on down through the supply chain. Construction workers and their families, suppliers of building materials to the construction site, [and] city inspectors are all affected by this a freeze,” Molinaro said. “It is just more than workers building new homes who are affected. If the freeze continues, home sales could be lost by the home developers, which impacts the city over the long term in utility revenue and property taxes if these homes are delayed in being built or not built for a few years.”
EXTRA FUNDS FOR THE CHAMBER
Both the city of Enumclaw and the Port of Seattle is granting the Enumclaw Chamber of Commerce an extra $18,000 to help local businesses.
The revenue was made available through the Port’s Economic Development Partnership Program.
According to the unsigned grant agreement, the Enumclaw Chamber will use the funds for two different projects, the first being to conduct a survey among local businesses and collect data on how they’re operating during COVID-19 — whether they’re open or closed (or if they’re anticipating having to shutter), how affected their revenue is, what new or creative revenue streams they’ve invested in, what their greatest needs are, what financial assistance they’ve applied for and been able to receive, and more.
In the short term, the Chamber hopes this study will help it have “a better understanding of the challenges facing businesses” during the pandemic; for the intermediate and long term, it hopes this data will help all businesses be “better informed” when it comes to economic development programs, which in turn will lead to “fewer businesses relocating out of the area.”
The second project is reviving to support the Chamber and city’s Buy Local program, which encourages residents to shop in town, rather than leave to shop elsewhere. The Chamber hopes to relaunch the program in September or October 2020 and distribute Buy Local campaign materials throughout the city.