City projected to lose $23-$28 million by end of year due to pandemic

City council looks at pandemic impact on Montgomery's economy

MONTGOMERY, Ala. (WSFA) - The coronavirus pandemic has had a large impact on local economy and, in turn, a large impact on the revenue collected in the city of Montgomery.

At Tuesday night’s city council meeting, Montgomery Mayor Steven Reed announced where the city stands financially and what plans the city is working towards to save money moving forward.

To put it simply, the city is facing major financial challenges. Reed said the city council is going to have to make some very difficult decisions moving forward and is going to have to make some significant budget cuts.

“Right now the outlook is not good. Right now the outlook will call for us to have to make significant cuts and significant changes to the way we do business going forward in this city,” said Reed.

Following March and April’s major financial hit, numbers show that the city’s budget for the remainder of the year does not look promising.

“The city’s budget for fiscal year 2020 is $259,930,195, projections for the remainder of the fiscal year indicates a potential 20 to 25 percent loss of revenue which equates to $23 to $28 million.”

Reed said Montgomery sales and use taxes collected in March and April reflect a 6 percent decline and lodging taxes declined 39 percent. It is also projected that the percentage of decline for these revenues will more than double for collections in April. These numbers have not been reported yet but will be available at the end of the month.

To reduce spending, Reed said the city has not been filling certain positions, is evaluating each individual up for a raise on a case by case basis, and they are looking into reducing the amount of funding allocated to nonprofits and other organizations they normally support in the city.

“We’re going to have to account for every dollar that is in our budget. Every dollar spent is going to have to be justified and from there we will look at how we decide to cut and how we decide to try and save money,” Reed said.

The city has not implemented any furloughs, but Reed said they have told cabinet officials they need to start finding ways to streamline their spending for the rest of this year.

“I don’t believe in across the board cuts, I think that’s a really lazy approach to financial analysis,” said Reed. “I think that some departments probably will feel it more than others and we will take a look at that understanding that we are all going to feel some pain from my office all the way on down.”

Without a stimulus package available for local governments Reed said they are in for a challenging budget season and 2021 budget cycle.

“We can only hope that the $23 to $28 million projected decline is indeed the worst case scenario,” Reed said.

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