BURLINGTON, Vt. (WCAX) Burlington Mayor Miro Weinberger says the city needs to prepare for a “bad case scenario” in case federal assistance doesn’t come through to help address the economic fallout from the coronavirus pandemic.
Weinberger Monday said the city is anticipating a dramatic loss of revenue over the next 15 to 24 months, including a $5 million budget shortfall this fiscal year and a $10 million one next year.
He says he’s hopeful funding for states and municipalities will be included in Congress’s next major coronavirus relief bill, but the city will spend the month of May creating a budget in preparation for the worst.
“If we don’t get it, we will have very serious cuts that we will have no choice but to make,” Weinberger said. “I think we have to plan for the worst or if not the very worst, a least a bad case while still hoping with some optimism for better and we’re going to do everything we can working with our federal delegation to advocate and secure a better outcome.”
Weinberger says he's hopeful that the feds will provide substantial relief, but at this point, the city can count on only approximately $225,000 in relief funding, plus reimbursement for expenditures for emergency protective measures.
Until federal aid arrives, the city has three ways it plans to balance the budget and address the projected budget deficits: cut expenses, replace revenues and borrow.
To cut expenses, the city will take steps to reduce non-essential spending. Weinberger says they’re also preparing for the possibility of needing to reduce total expenditures for the fiscal year 2022 “by 5% or more from prior projections.”
To replace revenues, the city plans to spend down existing reserves.
“Our budget for the coming year will involve substantial reserve spending. We dug ourselves out of a $17 million hole to a nearly $13 million surplus in large part to having a “rainy day” fund. The financial storm of our lifetimes is upon us and we will use this fund to help get us through it,” said Weinberger.
Weinberger says the city does have emergency borrowing authority but does not anticipate proposing an FY21 budget that uses long-term borrowing to cover operational expenses.
“While we have not entirely ruled out using such measures in order to address our unprecedented budget challenges, doing so would worsen our structural medium- and long- term financial challenges and undermine for many years our efforts to address chronic infrastructure challenges,” Weinberger said, “Further, there is a risk that borrowing of this type, which is generally viewed very negatively by credit rating agencies, could add to our financial challenges by increasing the cost of our other planned and necessary borrowing.”