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The Covid-19 Pandemic

by Mark Reutter12:17 pmApr 1, 20200

Baltimore City revenues could drop by nearly $170 million

Revenue losses from the coronavirus outbreak have already thrown the city’s 2020 budget into the red

Above: City Hall faces a huge revenue shortfall. (Mark Reutter)

Baltimore’s budget director says the COVID-19 pandemic could cost the city nearly $170 million – $68.7 million in revenues this year and $100 million in fiscal 2021.

“Many of our revenue streams are tied directly to economic activity, so as businesses close and tourism travel has been discouraged and daily activities have slowed to a crawl, we project sharp declines in some of our revenues,” Robert Cenname, budget director, told the Board of Estimates today.

By far, the largest revenue stream for city government comes from property taxes that won’t be immediately impacted by the health crisis. (Property taxes are reassessed every three years by the state.)

But other key sources of local revenues – such as income taxes (projected at $367 million this fiscal year), hotel taxes ($29 million) and traffic cameras ($21 million) – are dropping in the wake of social distancing and government restrictions on travel and commerce.

Already, the absence of out-of-town visitors has led to sharp declines in hotel tax revenues, convention center receipts, parking revenues and amusement tax income.

And as more and more residents are furloughed from work, income taxes – the city’s second largest revenue stream – will also suffer, Cenname said.

The loss of $68.7 million of expected proceeds in the fourth quarter will place the city “in a deficit position,” he disclosed.

When the current fiscal year ends on June 30, the city will face a $42 million shortfall. He did not say how it plans to make up the deficit.

The city has a “rainy day fund,” but Mayor Bernard C. “Jack” Young has not said if he will take steps to tap into the fund.

To reduce current spending, Young has announced a hiring freeze on “non-essential” personnel, which excludes firefighters, paramedics and police officers.

Federal Aid Uncertain

Cenname said the $2 trillion coronavirus stimulus package passed by Congress and signed into law by President Donald Trump will include “some aid” to Baltimore.

But he said it is unclear at this point what the aid can be used for. “We know that we can use it to pay for some emergency expenses. We are not sure whether we can use it as general fund revenue to help the city,” he said.

For next year’s budget, which starts July 1, as much as $100 million of anticipated proceeds could evaporate as a result of an economic slowdown caused by the pandemic, Cenname said.

While a preliminary 2021 budget of $3.98 billion was released today, Cenname warned that it does not reflect the new realities facing Baltimore.

Significant adjustments will have to be made before May 6, the date when the final budget is submitted to the spending board, he said.

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