MONTGOMERY, Ala. (WSFA) - The health crisis posed by COVID-19 is now a financial crisis for governments across the country.
“That’s not the picture we want, but that’s the picture we have,” Montgomery Mayor Steven Reed told the city council. “We hope future stimulus packages will provide some relief, but we can’t budget based on hope.”
This month Reed cut each department’s unspent operational budget by 10 percent, shoring up nearly $6.9 million to offset the growing revenue shortfall.
“Had this measure not been mandated, the city would be looking at a projected shortfall of nearly $18.8 million,” stated Reed.
When people aren’t spending money in Montgomery, it’s a problem. Sales and use taxes fund nearly half the city’s general fund budget.
"Many businesses are still operating at less than full capacity with many businesses filing for bankruptcy and possibly closing their doors before the end of the fiscal year."
Unexpectedly, the total sales revenue at the end of May was still 2.9 percent higher than the previous year.
“Consequently the revenues collected by the City of Montgomery are not expected to return to normal levels in the near future,” he explained.
These numbers set the scene as budget meetings begin in July. Reed says the FY 2021 budget will be funded closer to the level of the 2017 budget; that’s nearly $27 million less than what the city’s operating with now.
“As fiduciaries of public funds, we are responsible for providing services to the citizens of Montgomery at a level that the city can afford, that’s what we are attempting to do here,” Reed said of the upcoming budget constraints.
All departments have already submitted their proposed FY2021 budgets, which are being reviewed prior to the July budget meetings