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From layoffs to hiring freezes: Salt Lake Co cities look at budget cuts during COVID-19

Posted at 10:48 PM, May 06, 2020
and last updated 2020-05-07 00:49:08-04

SALT LAKE COUNTY, Utah-- Cities across the Salt Lake Valley are looking at making cuts, because COVID-19 has thrown off the yearly budget.

It is forcing city leaders to find ways to make up for lost revenue, from laying off employees and hiring freezes, to canceling events and dipping into the rainy day fund.

Lost revenue from businesses barely plugging along during the global pandemic, has quickly traveled upriver.

"Part of our revenue stream comes from sales tax," explained Tauni Barker, Director of Community Engagement for West Jordan City. "And as people have stayed home and they haven't been shopping, that revenue stream has dropped dramatically."

She said West Jordan City lost $8 to $10 million in revenue, normally supplied by sales taxes.

It has left the city little choice but to scale back.

"The city has made cuts in just about every area," Barker said. "From programming cuts, to staffing cuts, to just tightening the belt on things."

At first, West Jordan asked for a show of hands, seeing which employees would volunteer for layoffs.

Barker said that ten people voluntarily accepted a layoff. However, that wasn't enough. The city went on to lay off 16 additional people involuntarily.

"From just about every division in the city. Mostly administrative positions," Barker said.

She said it is just under 10 percent of the total workforce. All laid off employees will receive severance packages, she said, which include pay and healthcare.

The city is also planning to move $3 million from the rainy day fund, to help fill the gap.

West Jordan is hardly alone in the struggle to make up for lost sales tax revenue. Millcreek Mayor Jeff Silvestrini said they plan to, "cut back as much as we can, city programs-- to the bones-- without doing any reductions in force."

Their 2020-2021 fiscal budget is projecting a 20% drop in sales tax revenue, he said.

Silvestrini explained that they're implementing a hiring freeze, and leaning on their rainy day fund.

"This is a rainy day," he said. "So we're going to use about one third of that fund balance, to make up the difference."

Fox 13 spoke with nearly every other city in Salt Lake County, and found many are looking closely at their budgets in the wake of a decline in sales tax revenue.

None of them plan to lay off employees, though some said they may not fill vacant jobs.

Salt Lake City Mayor Erin Mendenhall gave her budget speech Tuesday evening, and in it she said, "we're taking strategic and conservative steps to protect our finances."

She proposed a flat budget, and said they will maintain current position vacancies through January.

West Valley City and Draper City each mentioned they can draw from the rainy day fund, and could look at other options if needed.

Riverton said it is budgeting a projected 5% drop in sales tax revenue for the next fiscal year, but that the city is in a good position financially.

In Herriman, a spokesperson said their sales tax revenues have not taken a dramatic hit, but they are planning and preparing for any possible delayed impacts in the coming months.

With canceled travel and canceled events, the spokesperson said they have been able to reduce some spending, and feel they are in a good place.

South Jordan said its budget is "solid," and the city has built up a good emergency fund should it be needed.

"We have had impacts from COVID-19 in our tentative budget for next year," wrote Cottonwood Heights Communications Manager Tim Beery, in an email. "We are operating smoothly, but we will have to make some concessions on some projects and other planned events through the next year. We anticipate a flat budget and will reevaluate as time goes by."

All cities have stressed that they will still provide necessary municipal services to residents.

As they each plan for next year's budget, Barker and Silvestrini indicated that it's hard to say what sales tax revenue will continue to look like, even as businesses start to reopen.

"The challenge is not knowing how long this is going to last," Barker said, adding, "If this continues into the next year, or the next, or puts us into a downward spiral in terms of income and revenue streams-- we could be looking at years of impacts."