Gaithersburg might end this year with about $4.5 million less in revenue than expected, City Manager Tanisha Briley said.
Briley told the Mayor and City Council on Tuesday that through December, Gaithersburg had collected $45.5 million in revenue — 66% of the projected total for fiscal year 2021. (The city’s fiscal year runs from July 1 through June 30.)
“At this time, it looks as though we will end this year down around $4.5 million, or 6% below what we budgeted for revenue,” she said.
Briley, who started her job with the city in September, said that when the FY 21 budget was adopted in June, less was known about the duration of the COVID-19 pandemic.
“I think we were expecting some recovery in the second half of this fiscal year. This may still happen to some extent, but likely not enough to recover the projected declines,” she said.
Senior Budget Analyst Nathan Bassett reminded Briley on Tuesday that the city has planned to use $2.6 million in fund balance to offset the revenue decline.
Briley said that it might also be possible to cut expenses in the second half of the fiscal year.
“That’s gonna come, for us, with personnel,” she said. “The greatest majority of our budget is on people, as it should be. And so the biggest savings come from things like vacancy management, which we’ve been doing all year long.”
Gaithersburg’s FY21 budget that the council approved in June was about $3 million lower than the one introduced in mid-March as the pandemic was unfolding.
The cuts were due to anticipated revenue losses in certain areas due to the pandemic. Among those categories were projected losses in the hotel and motel tax revenues and admissions and amusements tax revenues.
On Tuesday, Briley said:
- Hotel/motel tax revenue was projected to be $300,000 at the end of the fiscal year, down from $808,160 in FY 20 and $1.1 million in FY 19.
- Admissions and amusements tax revenue was projected to be $130,000 at fiscal year’s end, compared to $1.5 million in FY 20 and $1.1 million in FY 19.
- Both hotel and admissions tax revenues are projected to be $500,000 in FY 22.
Council Member Neil Harris asked Briley if she thought the $3 million in cuts to the FY 21 budget was helpful. She said it was helpful, but there was no way to know how large of an impact the financial crisis would have six months from now.
“I do think that $3 million carveout was extremely helpful,” she said. “We are still trending down from our revenue budget, because at the time [the city] needed to adopt a budget …. Think about May and June [of 2020]. We hadn’t even experienced the worst of it yet. So, it made sense at that point in time that the second half of the fiscal year would look better.”
Gaithersburg Mayor Jud Ashman said on Monday that he is glad to have more answers to questions that city officials were asking about the city’s financial situation early on during the pandemic.
“We had to make some assumptions with the pandemic. It looks like we weren’t that far off in our assumptions…,” he said.
Dan Schere can be reached at firstname.lastname@example.org