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Coronavirus may cost Moreno Valley $20 million over two years in expenses and lost revenue

The best case scenario for Moreno Valley, city officials say, is the loss of more than $9 million this fiscal year due to the coronavirus pandemic — and almost $10 million next year.

The city’s third quarter financial summary, included in agenda materials for the Tuesday, June 2, Moreno Valley City Council meeting, shows that officials expect to lose about $9.3 million due to increased expenses and lost revenue this fiscal year, which ends June 30. And for next fiscal year, which ends June 30, 2021, officials are estimating a loss of $9.9 million.

A city report calls these projections “best-case scenarios.” Experts believe a second wave of coronavirus infections in the fall is likely.

Under normal circumstances, sales tax revenue is about 18% of Moreno Valley’s total budget, according to Assistant City Manager Marshall Eyerman and its tax on hotel stays less than that. Both have been hit hard, across the state, by shutdowns in response to the pandemic.

But there is good news, sort of, Eyerman said.

“We’ve planned since the last recession for these sorts of situations,” he said.

The city has set up emergency funds to protect against financial crises and does quarterly budget reviews of their two-year budgets so the city can respond quickly to unexpected problems.

But Moreno Valley is also cutting costs, starting with a 15% salary cut to all city staff, which was signed by the city council on May 5. City council members are each receiving a 10% cut to their $1,762 monthly salaries. According to Eyerman, the council had never had its salary cuts made during the 2008 recession restored in the years following, as city staff had.

Those cuts add up to “substantial savings,” he said.

No layoffs are planned, according to Eyerman.

“And then we’re looking at savings in the general fund that will not impact the general public,” he said.

That includes reductions in the overtime; travel and training; and materials and supplies budgets. Contracts are also being renegotiated.

The city will be dipping into reserves, taking out $2.81 million to cover losses this year. According to the report, there is currently no plan to use reserves again next year. According to city policy, a plan must be approved within five years to restore that $2.81 million to the reserve fund.

The staff report states that “all essential services” will be maintained over the next two years, along with meals programs for vulnerable community members, the city’s Emergency Operations Center, expanded services at the Employment Resource Center and more.

In-person retail shopping began to reopen this week in earnest, after Gov. Gavin Newsom released new guidelines for doing so on Monday, May 25. Eyerman said he believes Moreno Valley should bounce back.

“Recessions are cyclical and we’ve been prepared,” he said. “We’re looking for a swift recovery.”

Moreno Valley isn’t alone in being hurt by the pandemic.

According to the League of California Cities, COVID-19 could cause the state’s 482 cities and towns to lose at least $6.7 billion in revenue over the next two fiscal years.

Most cities reported unexpected expenditures, including disinfecting public facilities, purchasing personal protective equipment, buying new technology to allow remote work, opening emergency operations centers and increased public safety costs, including overtime.

More than 79% of all cities are expected to cut services, including 79% of cities with a population between 100,000 and 249,999 residents. Moreno Valley has has more than 213,000 residents, according to U.S. Census Bureau estimates.

In Riverside County, Riverside is preparing to make a 10% budget cut due to the pandemic, Hemet has lost 34% of its sales tax revenue, Perris has lost 10% of its revenue and San Jacinto has lost 16% of its sales tax revenue.

As of Friday, May 29, Riverside County had 7,486 cases of COVID-19, including 323 deaths. Of those, 792 cases and 23 deaths were in Moreno Valley.

Source: Orange County Register

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