Coronavirus pain hitting local government budgets

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The COVID-19 epidemic has killed dozens in the region and shelter-at-home orders have changed the way we live and work.

Those shifts, including a massive drop off in economic activity and tourism, are wreaking havoc on local government budgets. A lack of sales tax revenues and hotel occupancy taxes, which fund large portions of local city budgets, are driving the revenue shortages.

Cities forced to make difficult choices

Cupertino recently canceled their Fourth of July activities and most of its summer program, as it faces a growing deficit. The city also furloughed dozens of staffers, though the city has been brought some back in recent weeks.

The City of Santa Clara discussed its dark budget picture at a meeting Tuesday evening. It comes after last week’s letter from City Manager Deanna Santana, which discussed a potential $10 million hole this year. The next fiscal year could see more than $23 million in revenue shortages.

Santa Clara, which also canceled Fourth of July events, will likely have to cut public programs at parks and libraries. Additional cuts to major local infrastructure projects, and cuts to city staff and their salaries, are also on the block.

“Our approach is now changing from a growth strategy to one that is focused on retaining public service levels,” Santana said.

Further up the peninsula, Palo Also is also facing severe cuts. On Monday, its City Council approved cuts to police and fire services. On a divided 4-3 vote, after multi-hour hearing, the council cut the departments by more than nine percent. That will cut at least 24 police officer positions.

Recent projections from Palo Alto city staff expect at least $38.8 million in cuts to balance the budget.

“In one swipe, these cuts potentially will surpass all the steady reductions which have occurred over 17 years, reducing our department another 20%,” Palo Alto Police Chief Robert Jonsen said, according to Palo Alto Online.

Santa Clara County also facing big cuts

One level up the government rung, Santa Clara County is also facing a bleak budget picture. At its extensive meeting Tuesday, county officials detailed a potential shortfall of at least $285 million.

The county has an annual budget of more than $8 billion. While the county expects to receive significant funding for COVID-19 related expenses, that cannot be used to fill other holes.

County Executive Dr. Jeff Smith said some budget cuts can be achieved by leaving positions vacant or delaying projects. The county has also furloughed approximately 1,000 employees.

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