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'We've never seen a situation like this' - Pandemic pounding Cleveland's budget

Revenue $13 million short through end of July
Cleveland City Hall
Posted at 4:07 PM, Aug 13, 2020
and last updated 2020-08-13 18:43:42-04

CLEVELAND — Cleveland city leaders said Thursday that loss of tax revenue attributed to the coronavirus pandemic left a $13 million shortfall in the budget through the end of July.

"We've never seen a situation like this and never had to kind of monitor and survive in this situation financially," Director of Finance Sharon Dumas said during a teleconference with reporters.

The city covered that shortfall using part of a $43 million budget surplus carried over in an anticipation of a recession in this year's budget. But with five months to go in 2020, will the city be able to survive without cuts?

So far, Cleveland has avoided laying off or furloughing workers during the pandemic, but Mayor Frank Jackson said that's something the city is regularly reviewing.

"As of right now, we’re not trying to be realistic or unrealistic about it in a sense of projection, but looking at it in real time and if it warrants it, we will do it," said Jackson.

Dumas said by the end of the year the city could lose between $26 million to $35 million in city income taxes from businesses forced to close or cut staff because of the pandemic.

Another $20 million hit is expected to come in the form of lost admission taxes, parking, and hotel bed taxes tied to canceled concerts, sporting events and conferences.

Through the end of June, the global hospitality research company STR estimates hotel occupancy in the Cleveland area is down nearly 41% compared to a year ago.

"We’re not looking toward any restoration of concerts or sports events to buffer that number," said Dumas. "If they happen, we’re happy, but we kind of deal with what we know to be a reality of today."

Dumas said there are signs things are slowly improving, but warned that any new restrictions put in place because of COVID-19 could drive tax collections back down.

Jackson said he doesn't want to draw city budget reserves down to zero and pledged the city would not operate in the red, even if mean impacting the nearly 6,000 workers paid for out of Cleveland's general operating budget.

"We do want to have some monies left so we can carrying something into next year so what that comfort level is, I can’t tell you," said Jackson.

The city said it also took a budget hit from needing to purchase protective equipment for workers and improve sanitation of buildings.

Dumas said the city is currently looking at whether federal stimulus money Cleveland received may be used to offset some of those losses.