Major financial impact anticipated for Lynnwood
By Erin Freeman | Lynnwood Times Staff
The City of Lynnwood held a virtual special finance meeting on April 9 to discuss preliminary estimates of the financial impacts COVID-19 poses to the City of Lynnwood.
“There’s a major financial impact that is anticipated to hit the general fund, mostly due to sales tax revenue decline,” explained the City of Lynnwood’s Finance Director Sonja Springer.
City of Lynnwood’s Finance Director Sonja Springer anticipates that Lynnwood will experience a major financial impact through reductions in revenues received through the Transportation Benefit District (TBD), Criminal Justice Sales Tax Fund, the City’s Lodging Tax Fund, Admission taxes, Recreation and Park Revenues, and impact to fines and forfeitures.
Springer’s total estimated reduction to general fund revenues add up to $5,160,000, equivalent to 9.3 percent of the 2020 initial forecast. Revenue impacts to Business License Fees, permits and development fees are still to be determined as of April 9.
“Throughout the entire year, the economy is going to be hit, and hit for a while. It’s probably going to go all the way to 2021 depending on when we can finally get things back to normal,” explained Springer.
Councilmember Ian Cotton expressed uneasiness with the inability to predict the exact reductions in general fund revenues.
“We’re in this vacuum of not knowing what the actual financial impacts are yet so we are operating in this float where we’re going to burn for several months before we get to see what the true impact is to revenue,” noted councilmember Ian Cotton. “I don’t want to be alarmist, but I also want to see what we can do to get close. I know Director Springer that that’s asking you to pull the crystal ball out and that’s not a fair expectation.”
Later that afternoon, Director Springer discussed the city’s planned remedial steps for expenditure reductions and savings. She said that department directors were asked to identify planned expenditures in their adopted 2019-2020 budgets that could be deferred, reduced or eliminated.
“They spent a lot of time looking at their budgets and what’s spent and what they can save throughout the rest of the year… the total savings we’ve identified so far is over 3 million dollars,” explained Springer.
Council President Christine Frizzell expressed concern with the estimated $3,242,968 of expenditure reductions/savings.
“I think we’re going to need more than 6% trimming of costs and I’m not sure where that’s going to come from,” said Frizzell.
“There are still tools we can use to consider that we have not pursued yet,” responded Director Springer. “We were first going to see what expenditures could be initially reduced before we start looking at more serious things.”
If the city experiences the forecasted revenue shortfall, additional policy decisions will be considered to assist with softening the financial impact. Director Springer presented proposed options to include revising the number of permit revenues, and/or sales tax revenues that currently get transferred into the Economic Development Infrastructure Fund (EDIF), temporarily using a portion of the Revenue Stabilization Fund to cover the temporary revenue downturn among other options.
“How quickly consumers and businesses start to do what they normally do, well that’s the million-dollar question; how quickly will the economy bounce back,” said Lynnwood’s Assistant City Administrator Art Ceniza. We’re all just asking our finance folks to monitor the economic situation as quickly as possible.”
The next Special Council Meeting to continue to discuss the financial impacts of COVID-19 on the City of Lynnwood will take place on at 3 p.m. on Thursday, May 7.