The Danville Town Council is set to review the ongoing financial impacts of the coronavirus pandemic during a special budgetary study session on Tuesday morning, during which time town staff will offer options for reducing expenditures to account for revenue shortfalls.
Originally scheduled as a review of the town's 2020-21 budget and various capital improvement program projects, Tuesday's meeting will see the council discuss three potential options that could reduce the town's total expenditures by anywhere from $3 million to $7 million.
"The pandemic has created an immediate and significant financial impact upon all sectors of the global economy. Local government is no different," Town Manager Joe Calabrigo said in a staff report.
"The ongoing pandemic presents several budget planning challenges for the upcoming 2020-21 fiscal year. These include how to accurately forecast revenues in light of significant economic uncertainty, how to adjust service levels in light of less revenue, and how to present information to facilitate informed decision-making by the Town Council," he added.
After anticipating a loss in revenue of $2.2 million for the remainder of the 2019-20 fiscal year, town staff will present the council with three scenarios where the town can reduce its expenditures by $3 million, $5 million or $7 million in order to account for lost revenue resulting from the pandemic.
Town staff noted that the reduction of expenditures is preferable to dipping into the town's reserve funds, because reserves can serve as an "added contingency measure should such actions become necessary."
Calabrigo added that town staff believe reducing expenditures by $5 million "represents the most likely outcome and should serve as the basis for (the) 2020-21 budget planning decision."
Referred to as "Scenario 2," the $5 million in reductions would result in the town eliminating merit-based pay increases and overtime pay for town employees as well as freezing the filling of several available positions, among a number of other reductions.
All three scenarios forecast a phased recovery of operation, with town officials calling Scenario 1 the best case scenario resulting in full recovery by spring 2021, while Scenarios 2 and 3 are not projected to see a full recovery until the 2021-22 fiscal year.
"The onset of the global coronavirus pandemic and the resultant shelter-in-place (SIP) orders that began in mid-March have created an immediate and significant financial impact upon all local governments. As a result, the process to consider and adopt the 2020-21 operating budget and CIP will be unique and unlike prior year efforts," Calabrigo said.
As a study session, council members will only review options and provide direction to staff, an official decision on budgetary reductions will need to be made during a regular Town Council meeting.
The Danville Town Council's budgetary study session will be held in-person 8 a.m. on Tuesday at the Danville Community Center, 420 Front St. Space will be limited in the meeting and all attendees will be required to wear a face covering and maintain appropriate social distancing.
Written comments must be emailed to [email protected] by 5 p.m. on Monday.