Unexpected costs and a large drop in sales tax revenue leave a big hole in city budget

By Jane McClure

The COVID-19 pandemic will be a budget buster for the city of St. Paul, Mayor Melvin Carter told the City Council on May 6. The city has already spent $7 million this year on pandemic-related costs that were not anticipated in its 2020 budget. That, combined with the anticipated drop in local sales taxes, hotel and motel taxes and other sources of city revenue, means the picture could be bleak in 2021 with an estimated $19 million to $34 million hit to the city budget.

“This will present real fiscal challenges, which will impact all city departments,” Carter said.

The city is adjusting its 2020 budget as it amends plans for its 2021 operations. Staff vacancies are not being filled, and all expenses are being scrutinized to see what can be deferred. Carter said that though he is confident the city can find a way forward, he cautioned that changes lie ahead. He said the total economic impact of the pandemic has yet to be realized as state officials balance the need for public safety with the demand to reopen businesses that have been fully or partially closed by order of Governor Tim Walz for almost two months.

   

One major concern for the city is the trickle down effect of the state’s own budget woes. A projected $1.5 billion state surplus became an estimated $2.4 billion state deficit over the past couple weeks, and that could affect the amount of Local Government Aid St. Paul can expect to receive from the state.

One major concern for the city is the trickle down effect of the state’s own budget woes. A projected $1.5 billion state surplus became an estimated $2.4 billion state deficit over the past couple weeks, and that could affect the amount of Local Government Aid St. Paul and other cities can expect to receive from the state. St. Paul officials have been working with the state’s congressional delegation to see what funding is available from the federal government, Carter said.

The City Council on May 6 adopted a temporary reduction in business license fees to offer some relief for local businesses that have suffered a pronounced reduction in revenue due to the pandemic. Council members reduced license fees by 25 percent for many types of businesses, extended for 90 days the deadline for business license renewals that were due before August 1, and waived the late fees on a one-time basis.

 

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While city facilities, including recreation centers and libraries, remain largely closed, city parks, trails, dog parks and other public spaces have been opened with social distancing guidelines, though group activities involving people outside of one’s immediate family are still prohibited.

Some basketball and tennis courts have also been reopened as part of the Parks and Recreation Department’s Rec Engagement Crew (REC) pilot program. The goal is to safely reintroduce recreational activities in each of the city’s seven wards.

REC workers have been assigned to each of the pilot program locations to educate and encourage park visitors to abide by social distancing and other public health directives. Signs will be posted to explain the public health guidelines and how following them will help to keep the facilities available for all to use.

The newly reopened basketball and tennis courts in the Villager’s coverage area are located at Dunning, Groveland, Homecroft, Mattocks, Martin Luther King and St. Clair recreation centers. City crews are replacing the basketball hoops and other recreational equipment that were removed in April. 

St. Paul’s municipal golf courses were reopened to the public in April. However, the city’s playgrounds, skate parks, Highland disc golf course (now open) and other sports courts remain closed. Restrooms and drinking fountains in the parks also remain closed. Como Zoo and Conservatory and the Great River Water Park remain closed. No decisions have been made on when the city’s swimming pools will reopen.

Parks events, rentals, programs and activities have been canceled through May 18, though refunds for cancelled activities are being offered. The cancellation period could be extended depending on decisions made at the state level.

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