Enumclaw’s first-quarter finances OK, but tough times still remain

Some of the city’s revenues were “significantly affected by the pandemic”, while others remained “somewhat neutral.”

As cities and towns everywhere struggle with the financial fallout from COVID-19, one thing has emerged as abundantly clear – while all are in a belt-tightening mode to some degree, many are frantic.

Enumclaw presently is not among those in panic mode.

A recent financial report to the City Council detailed lost revenues, told of cost-cutting measures and warned that bad times remain. But, in the end, the city is surviving.

The regularly-scheduled council meeting of June 8 followed a recent trend, with Mayor Jan Molinaro, City Clerk Maureen Burwell and City Attorney Mike Reynolds sitting in council chambers at City Hall; other city employees and the seven members of the City Council participated remotely.

“It’s been quite a challenge to assess the impact of COVID-19,” Finance Director Stephanie McKenzie reported. But, in the end, she said, the city is prepared to weather the ongoing storm.

The council was given a first-quarter financial report (January through March) that included pandemic impacts. The report looked ahead to three possible scenarios:

• High impact – slow economic recovery through the end of year with a sharp decline in the second quarter and slow recovery in the third and fourth quarters;

• Medium impact – sharp decline in the second quarter with moderate recovery during the third and fourth quarters; and

• Low impact – fast recovery after a sharp decline in the second quarter, slow growth in the third quarter and “back to normal” levels by the fourth quarter of the calendar year.

As with all budgets, the city’s financials deal with money coming in and money flowing out. Last week’s report dealt primarily with the general fund, which supports crucial municipal functions.

The first-quarter report, prepared by McKenzie and City Administrator Chris Searcy, noted that the general fund has multiple sources of revenue, “some that are significantly affected by the pandemic and others that remain somewhat neutral.”

Property tax collections haven’t been impacted too much, McKenzie said, as all the major mortgage brokers released funds that had been held in escrow accounts. The city is anticipating a small reduction, perhaps 5 percent, in fall collections.

“But, so far, they’re looking pretty normal,” she said of property tax revenues.

Also adding to the city coffers are sales tax revenues which are “difficult to measure,” McKenzie said. Adding to the mix is the two-month lag between customer spending and when Enumclaw receives the tax money from the state.

“Due to the stay-at-home order, we know that many high sales tax businesses have been closed, while others have experienced an increase in demand,” the financial report states. McKenzie told the council March was not favorable for car dealers and restaurants, but was positive for grocery stores and hardware/home improvement businesses.

Development revenue has slowed a bit, but there are still five active housing projects in the works, along with five commercial efforts (three of those being city projects).

Revenues from recreation activities have taken a hit, with approximately $10,000 refunded thus far due to programs being cancelled. At the city-owned swimming pool, another $2,700 has been refunded to paying customers.

To keep the financial bleeding at a minimum, city leaders enacted a series of cost-cutting measures. All non-essential travel and training was cancelled; a vacant police officer job has not been filled; the hiring of seasonal workers has been delayed; supply purchases have been limited to the most essential; and community events have been cancelled or postponed.

In the end, McKenzie said, “we feel like the general fund is in a strong position.” That is partly due to a philosophy that built some healthy reserve accounts.

The various city-operated utilities are also relatively healthy, McKenzie said. “We do have some customers who are a little behind in their payments,” she said, “but it’s very few.”

Both Searcy and Molinaro warned that the worst is not over, as the difficult months of April and May will be reflected in the second-quarter outcomes.

“I’m sure April is going to be little bit of a downer,” Molinaro said, but he remained upbeat.

“We’re blessed to be in the position we’re in,” he said, explaining that many regional cities are heavily dependent upon sales tax revenues and are being crushed by the pandemic.

Council members shared the positive outlook.

“I think we’ve positioned our city in a way that we’ve been able to be resilient,” Councilman Kael Johnson said.

Councilman Beau Chevassus thanked the City Hall staff for keeping things on an even keel. “You guys are all rolling with the punches in incredible fashion,” he said.

Councilman Chance Le Fleur approached the issue from both sides. “Don’t be surprised if we have one more bad month,” he warned. But, looking at the positive, he noted that Enumclaw has experienced “a financial inconvenience instead of total devastation.”

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