Wednesday, May 27, 2020

Moab, UT

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    Doug McMurdo
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    File photo by Carter Pape

    City Manager Joel Linares brought home the point Tuesday when he advised the Moab City Council during a budget presentation that, “not all months are created equal,” when it comes to the collection of sales taxes, and the profound losses incurred due to COVID-19 in the tourism-heavy months of March through May could impact as much as half of the city’s annual $9.5 million in sales and transient room tax revenue.

    Newly hired Finance Director Klint York had no good news to share during his presentation, which surprised nobody, but the depth of the austerity measures the city will have to take will lead to significant cuts in personnel. In fact, layoffs are the only option left as the city has already made severe cuts to other facets of government.

    While the impacts of the economic shutdown won’t be fully realized for a couple more months, York projects losses between $3.1 million and $5 million. Earlier during the pandemic, the council focused on four tiers of where to potentially cut costs, with layoffs being the fourth and final and, at the time, one that nobody wanted to get to.

    The fact the city already had to trim $1.2 million to balance its budget before the pandemic even arrived hasn’t helped. Salaries have already been reduced and overtime reductions have been in place.

    As of now, 67 active employees have been furloughed or subject to layoffs. “We’ve cut everything we can up to personnel,” said York.

    Mayor Emily Niehaus and council members, along with Linares, focused on their base duty to citizens, and that is ensuring essential services continue, such as water, wastewater, garbage collection and public safety.

    “There’s lots of tough decisions coming to us as we finalize the budget,” said Niehaus in looking at the two budget scenarios York provided, one more conservative than the other.

    Linares, however, was not prepared to ask for consensus, in large measure because he doesn’t know what will happen when the economy fully reopens. Will tourists once again flock to Moab without any hiccups or will half that number visit? What about the international visitors that arrive in the hot summer months — will they come?

    “The reality is, we’ve cut everything we can … now, at this point,” he said.

    While Linares said he believes visitation might reach 50% of the average from recent years, he noted the city is “wholly dependent” on tourism dollars. The dilemma was not unexpected. On one end, city officials want to protect citizens, but on the other end, revenue dropped down to essentially zero, he said.

    “We have time to watch it some more, get more information and make better decisions,” said Linares. “There’s no need to make a decision today.”

    Linares said he will come to the city’s May 26 meeting with information on other potential revenue streams. Grants have been written and applied for and other steps have been taken to mitigate the financial bleeding.

    “We have very hard decisions coming up,” said Niehaus.

    Moab Recreation and Aquatics will remain closed

    Even if COVID-19 disappeared from the face of the Earth, the city might remain reluctant to reopen the swimming pool, a subject that came up when it was noted people were angry over it not being open. The cost of keeping it open, however, is prohibitive, and there’s no way user fees will ever come close to covering those costs.

    The monthly payroll is about $30,000. The gas bill to heat the pool in March was $3,300, and the power bill averages between $4,000 and $5,000 per month. “It’s super expensive to run,” Niehaus said. “We never recover the cost with user fees. It’s exceptionally difficult right now. We don’t have the sales tax to cover those costs.”

    The council must approve its budget in June. The 2020-2021 fiscal year begins July 1.

    RAP Tax on ballot

    In a related matter, city voters will be asked to approve a Recreation, Arts and Parks — RAP — tax in the November election. The tax would constitute one penny per dollar spent on prepared food. Council Member Karen Guzman-Newton noted the tax would add one dime to a $10 food bill.

    According to the city, tourists pay 65 percent of all sales tax in Moab, including at City Market. Public hearings and forums on the issue will be held prior to the election.

    As the name implies, the anticipated $300,000 to $400,000 in tax revenue would be dedicated to recreation, arts and parks, which would then allow the city to use general fund money that currently supports these amenities to instead go toward roads and other infrastructure needs. The tax would sunset in 10 years, at which time, it would have to be renewed.

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