City And County Face Budget Challenges With 'Economy Turned Off Like A Spigot'

Apr 1, 2020

Cincinnati administrators are providing a more accurate breakdown of how many city workers will be furloughed for at least four weeks starting Sunday.

The additional details were released Wednesday during a special City Council Budget and Finance Committee meeting.

The temporary emergency leave (TEL) will impact 601 full-time employees and 1,118 part-time workers.  Many of the part-time positions are currently not filled because they haven't started working yet. For the city's March 31 payroll date, 443 part-time employees received a check.

Chart showing Cincinnati furloughs by department.
Credit Provided / City of Cincinnati

"Employees may be recalled at any time based on the changing needs of the departments," said City Budget Director Chris Bigham. "Employees have been advised to stay in close contact with their departments should that change. And then also, we know there's a lot of questions about impact and we're currently working on an FYI memo to spell out what that impact is by department."

The city manager announced the furloughs Monday because of the city's worsening budget issues because of the COVID-19 pandemic.

For the final three months of this current fiscal year, which ends June 30, the city anticipates losing nearly $52 million in city revenue, with most of that from reduced income tax collections. In addition, the city estimates it's spending an extra $13 million responding to the crisis.

Right now. the expected deficit for the new fiscal year starting July 1 is $80 million. But that assumes the pandemic is under control in June. If it goes longer, the deficit for the new year will continue to increase.

Council members had their first opportunity during the meeting to ask questions about the TEL program.  Most of the questions and debate centered on whether the city administration was acting at the right time, or should wait for additional data.

Council Member P.G. Sittenfeld said on Twitter that the plan to furlough city employees was being done at "warp-speed" with incomplete information and not engaging those employees or their union representatives.

"I'm not necessarily even questioning, you know, that there is sacrifice and pain in some of the outcomes," Sittenfeld said. "But it feels like we are lurching towards them, which to me feels like worst case scenarios as first choice."

Sittenfeld said the city should wait to see if it will receive state or federal aid to assist with budget shortfalls before making furlough decisions.

Council Member David Mann then asked Sittenfeld how much longer the city should wait for that information.

"So, on what timetable do you think we'll know enough?" Mann said. "Because each week that passes, the hole is deeper and deeper and the cure to address that involves more layoffs and more people damaged, so I don't see how you can avoid that."

Vice Mayor Christopher Smitherman also agreed - waiting even two weeks could make things worse, he said.

City Council did vote on resolutions to cut their office budgets by 10%, and they also agreed to a resolution to allow each council member, by his or her own choice, to donate 10% of their city salaries back to the city.

Mayor John Cranley, City Manager Patrick Duhaney, and city department heads have all agreed to temporary 10% pay reductions while some city workers are on furloughs.

What's Happening In Hamilton County?

Meanwhile, Hamilton County leaders are not ready to announce furloughs or layoffs to deal with a budget crisis caused by the coronavirus pandemic.

But County Administrator Jeff Aluotto says those decisions will come sooner rather than later. He said officials are running financial models in an unprecedented time.

"We're very adept financially, at projecting trends - when we have a trend that we can see - and projecting those trends into our budget," Aluotto said. "But I can say that nobody has, and from a local government perspective, has any experience working in an environment where the economy is suddenly turned off like a spigot. It just doesn't happen."

Right now, the county anticipates losing $20-30 million dollars of sales tax revenue because of the economic downturn. Other county income sources are also expected to dip in the short-term as well.

Even with the sales tax downturn, Aluotto said for now, the county will be able to make the required $42.6 million debt service payment due in December for Paul Brown Stadium and Great American Ball Park. The stadium fund has a $40 million balance, and the county will continue to receive sales tax revenue, although at a reduced rate.

And even with a reduction in the use of local hotel rooms, Aluotto said there should be enough residual revenue from the transient occupancy tax (hotel/motel tax) to fulfill the financing requirements for buying and demolishing the former Millennium Hotel in Downtown Cincinnati. The Port Authority sold bonds for that project, and the county pledge residual transient occupancy tax revenue to pay the interest on those bonds.