COVID-19 and City Spending – An opinion

By Chip Ross
Fernandina Beach
City Commissioner
April 5, 2020

The impacts of COVID-19 are being felt in everyone’s day to day life. The crisis has upended lives, impacted individual’s physical and mental health, and disrupted the economy on a scale that hasn’t been seen before in living memory. What adds to the anxiety is the lack of knowledge of when and how this will end.

The Covid-19 pandemic presents significant challenges to City government to continue to protect the health, safety and long-term viability of our community. We must not only focus on what will get us through the pandemic, but also on what we must do to preserve and protect our community in the future. We do not want to win a battle and then lose the war.

An immediate crisis within our community is food security. At this time, our food service providers for the elderly and the disadvantaged are tremendously being impacted. At the 7 April 2020 City Commission meeting a short-term funding effort will hopefully be placed on the agenda to help prevent hunger. The proposal, or variation of it, if enacted, will ensure that the Nassau County Council on Aging and Barnabas have adequate funding to support the senior meal program and the Barnabas food pantry program during this crisis.

In a crisis, citizens often overlook the monetary requirements necessary to provide essential services. The Police must be able to respond to keep law and order. The Emergency Medical Services [EMS] must swiftly respond to care for the sick and injured. The Fire Department must respond to fires and vehicular crashes. The toilets must flush, the waste is treated, and our drinking water remains clean and available. The trash must continually be removed, and the roads must stay open and be in good repair. To the City’s credit, the essential service staffing is excellent with solid leadership in these services. And thankfully, there are significant reserve funds to supplement any required increases in these operational expenses for the foreseeable future. The City has approximately 4.2 million dollars in reserves to ensure that the essential services are provided, even if all revenue would cease. Additionally, we must all remember that June marks the beginning of hurricane season, which we must monetarily be prepared to respond to, if that threat should arise.
Unfortunately, despite the arrival of a pandemic, the decay of some of our essential services buildings needs to be addressed in the very near future. City Hall and the 1st Avenue Fire Station/EMS physically require our attention as soon as the money can budgeted. There is no question that City Hall has the opportunity to flood in a hurricane, it is in the Special Hazard Flood Zone. And the 1st Ave. Fire Station is no longer large enough to house our fire vehicles, trucks and equipment. Delaying vehicle replacements may save some money in the short term, but the increased cost of replacement in the future may endanger the safety of our front-line providers in the short term.

No virus ends the costs of rebuilding and repairing decaying essential services structures. Nor will the pandemic stop future hurricanes. Climate change has not halted. The question is not if the City will flood, but when, how often, and how much. A large part of the waterfront project consists of shoreline protection which will protect the downtown and City Hall from flooding. To delay proceeding with continued engineering imperils our City to other dangers.

To add to the City’s financial recovery challenges, it has several restricted funds which cannot be diverted to other uses. And it faces a likely devastating blow to its sales tax receipts due to the drop in tourism and commercial activity. Our restricted funds, by law, can only be spent on certain activities as prescribed by the law that created the fund. Among them are the utility fund, the building fund, and the land conservation fund.

Previously, the City received approximately 2.2 million dollars a year in sales tax revenue. Tourism supplied 34% of it. This will impact the City’s current and future operations. Although we are only a third of the way into the fiscal year, the City has already collected almost half of those revenue sources.

At present, the City has several construction projects in progress, including the northern marina attenuator, phase II of the board-walk, and several beach walkovers. The contracts for these projects have been awarded, signed, and construction under-way. To stop these projects at this time would cost the City significant financial penalties and leave unfinished infrastructure.

Hopefully, in the short term and the long term, the City will adequately keep its essential services in the City functioning. It will keep our citizens secure in their needs for food, safety, and other essential services. And that it will cooperate with the County, State and Federal governments in containing and mitigating the spread and effects of the virus.

As the pandemic is brought under control, the City must then create a thoughtful plan for the medium-term and longer-term challenges as they unfold. The process will be the crafting a budget that supports both the short-term recovery efforts, and the long-term infrastructure needs which support and preserve the quality of life we enjoy.

I appreciate your comments. I can be reached at [email protected]

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Becky Carter
Becky Carter (@guest_57131)
4 years ago

Please stop spending, spending, spending for more parks, trails, extra City personnel, high salaries, etc. These luxury items we do not need and have money for as Amelia Island and its citizens recover from this economic crisis. Fernandina Beach needs to step back and take care of and think of ourselves, the citizens here, now. Please!

Nicholas Velvet
Nicholas Velvet (@guest_57132)
4 years ago

As I have been posting for the last two weeks, our City Manager needs to manage. No more high school civics classes for Seniors explaining how government works. We all know how this City government has worked over the last ten years, endless budget increases for expanded services/make us better projects and for the taxpayers, increased tax bills. The Full Employment Act for Government. Enough is enough.

Based on figures posted in The Observer approximately $750,000.00 is gone in “bed tax” dollars 2020-2021, any commercial property owner(? percentage of City tax dollars) will be filing for tax relief due to tenants not paying rent, loss of business(no business) as last time I looked, commercial property tax rates are based in large part on income stream approach and “service related employment” gone. Tax base lost? 25%~~40%? Effective unemployment north of 25%? . Current economic models have a deep recession in excess of a year(optimistic) and on the City adjenda for April 7th has waiving completive bids for an executive search for?…..AN Assistant City Manager position? WHAT!!!!

I believe one Commissioner said weeks ago of the budget, “there is nothing to cut”. Well Gents, you are about to loose a significant percentage of your income stream i.e. lost tax dollars. In private business(I ran my own for over 30 years) you do not spend what you do not have except if you can print money. We are not month one into a reset like this island has not seen since 2008~~2010 and already there was mention of “WE HAVE 4.2 MILLION IN RESERVES”. Stupid is stupid folks, that’s why they are called reserves.

I challenge the City Manger, supply a complete copy of the City of Fernandina Beach Budget including all payroll, project expenses, i.e., a complete line item budget in a word format on a zip drive. Since I assume the budget is public information I do not see a problem. You can have it taped to your outside City Hall glass door and I’ll pick it up. Reply here when it’s ready. I am sure I can review and across the board institute a 30 percent cut. No project will be exempt. FY,I pandemic I would think should have been listed in all City contracts as a Force Majeure line item. Translation, all contracts are immediately on hold. Your $500,000.00 Simmons Road Park plan is shelved. Instead of building 20 plus beach walk-overs @ $200,000.00 plus per?(this was the figure that was bantered about in The Observer articles I read months ago) I have to think sand will do until we are “out of the woods”. With the private work force in the streets city workers have to realize half a loaf is better than none or perhaps 2/3’s of a loaf but to turn around and even suggest increased staff, equiptment, etc. is financially irresponsible. Oh what was I thinking?……. We’ll just layer this into a massive document called the City Budget, have a few noticed public meeting and presto!! the tax payers as always will just pay up. One key factor Gents you just do not see……the taxpayers are gone. They are too busy trying just to survive and your only growth line item in your financials will be the unpaid tax line. It’s called Normalcy Bias and you sure have a major case of it.

Think the above is impossible…..? I have a Fairytale for you.

Natasha Roberts
Natasha Roberts(@natasharoberts)
4 years ago

You do understand that city workers are still reporting to work putting themselves at risk and in turn, putting their entire families at risk. This is especially true for the city first responders. To even suggest that they should accept that a “half loaf or 2/3 loaf is better than nothing” and comparing them to other workers who are at home safe is offensive.

Hughes Tom & Stacye
Hughes Tom & Stacye (@guest_57133)
4 years ago

increased taxation is a poor option

bobby carter
bobby carter (@guest_57134)
4 years ago

funding such a luxury as Main Street during this time is pointless now. As one of many pet programs, it can be cut out. Save another $120,000 plus staff time.

Arlene R. Filkoff
Arlene R. Filkoff (@guest_57138)
4 years ago
Reply to  bobby carter

Mr Carter, right now the Main Street organization is working fast and furiously on helping our downtown businesses through this crisis. Are you familiar with the program and what we’re doing? If not, I will be glad to share. Also, the city’s contribution to the program is 40 thousand dollars per year. They have historically provided a three year commitment. I would love to share info with anyone interested on what we do and why we believe it is important now more than ever for our historic business community. No staff time is taken away from city priorities. We work to implement city policies.

Betsie Huben
Betsie Huben(@betsie-huben)
4 years ago

As a doctor, you know that when a spot appears which might be cancer of a malignant nature or gangreen for example, a wide excision is done to ensure that everything central and at the periphery is addressed early on. It is a bold approach that tries to anticipate that which cannot be seen at the time of the original excision. I think we are in similar state here. Colorado State University came out with their predictions for the Atlantic hurricane season and the estimates are up for 2020 – 16 storms with half at Cat 3, 4, or 5. Estimates for incoming tourism revenues are anticipated to be way down. Big, bold cuts need to be made now because we really cannot anticipate what the future holds as we have not hit our peak for COVID-19 here. Prepare for the worst and pray for the best so that, hopefully, we land somewhere safely in the middle.

Lou Goldman
Lou Goldman(@lgoldmngmail-com)
4 years ago

After two years the City just spent a fortune on the southern part of the marina and we’re still waiting for FEMA to pay us back. Is the City going to now have insurance coverage on t\he marina?

Dave Lott
Dave Lott(@dave-l)
4 years ago

Chip, as you were gracious enough to speak to me on the phone, we agree on some of these items and disagree on others. Certainly, those critical (everyone likes to think their work is “essential” in some way) services you mention such as public safety and utilities must continue to operate and the COVID-19 environment will continue to put additional pressure on their personnel both in terms of additional workload and individuals having to quarantine due to having the virus.

Having been heavily involved in the creation of the 2012-13 budget at a time when the City’s citizens and businesses were still feeling the negative effects of the Recession, I was alarmed to see many of the items included in the current 2019-20 budget, especially the major increase in staffing outside of the critical departments and implementation of the additional tax for the conservation fund. Certainly no one could have predicted the devastating impact on the local, state and national economy from COVID-19, but there were clear signals in other sectors back in early 2019 that the U.S. economy was in a fragile state and it was not a time for great expansion and tax increases as was done.

Now is the time to examine the budget for planned expenditures and delay those that can be until we have a clearer picture of the expected longer-term impact of the COVID-19 pandemic and recovery of our environment. To my knowledge, City Hall has not suffered any flooding in several decades and while I support a consolidation of many city services in a single facility, any major efforts and expenditures to effect such a move should be delayed. While the situation at Station 2 is not ideal, again it has been that way for years and a delay of several months before deciding on a course of action should be no problem. The tree conservation fund earmark was a decision by the Commission and can be reversed and those funds held further in reserve to ensure solvency.

An austerity budget has two elements – first and foremost is reducing expenses and second, a tax increase, but only if necessary if the expense reductions are not sufficient to avoid a deficit. Now is the time to focus on expense reductions in the Operating Budget to offset the expected declines in revenue from sales tax and others sources. Kudos to Commissioners Lednovich and Kreger for their vote to delay the purchase of additional equipment for the golf course, but sadly they were in the minority. For a facility that isn’t open and not expected for at least a couple of months at a minimum, a reduced maintenance program using existing equipment should be sufficient to still maintain the condition of the course while it is not having any wear and tear from daily play.

Individuals are suffering major economic hardships at this time – either a loss of income completely or severe devaluation of their retirement funds which will reduce their annual distributions. Now is the time to pull back the reins of spending before more drastic measures such as personnel reductions will be necessary.