Cost-reduction measures are helping to stave off a gap in Harrisburg’s budget during the coronavirus pandemic, but the true test of how well the city will fare will be seen later this year, according to the director of the city’s Budget and Finance Department.
City council members were given an overview of the city’s finances Tuesday. Bruce Weber said things “seem stable for now” during the virtual legislative session.
“The truth of the matter is we have not seen a huge impact right now on the city’s finances,” Weber said. “That’s not to say that won’t happen. That has to be revealed in the numbers. Most of those numbers are lagging.”
Among the cost reduction measures to have a balanced budget by year’s end: 11 staff have been furloughed, and there is a hiring freeze.
“All in all, on a weekly basis, furloughs and vacancies does come to approximately $50,000 a week,” Weber said. “So there is a real cost savings there.”
The city has also seen a significant reduction “in the cost borne by the city for its healthcare costs,” he said. Spending has also gone down in fueling the city’s fleet, which is not only because of the coronavirus but other global market reactions.
Revenue is hard to forecast, Weber said, adding that the city started off 2020 strong.
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“We had a very good fund balance coming into the year,” Weber said. “We had very strong revenues coming into the beginning of April. The March-April timeframe is when the city’s cash is at its highest point for the whole year.”
May financial reports will help tell the story of how the city’s doing, Weber said. The mid-year report is obviously going to be “where the rubber meets the road,” when meaningful conversations about policy changes will have to occur, he continued.
The city has offered free parking throughout the pandemic. Parking revenue is one of the outstanding unknowns that Harrisburg has to wait and see what happens.
Trash collection revenue has decreased from this time last year, which he said shows a “drop in economic activity.”
Weber said he didn’t want to speculate about how unemployment could affect the city. He said he didn’t want to make any “predictions without good facts to back them up.”
“It is important to know that when they say this is unprecedented, there’s a lot of truth to that,” Weber said. “This is in modern times the first economic crisis that has been precipitated by a public health crisis. It’s been sharp, it’s been sudden, it’s been very specific, versus most recessions often tend to be gradual. They sort of reveal themselves over time and tend to be very broad-based.”
Compared to most other recessions, downturns were due to the overproduction of goods and no demand to match. The deeper recessions that are harder to climb out of are credit driven, meaning there is too much bad credit. During his presentation, he referred to previous banking crises.
“That’s what happened during the Great Depression, and then what you saw in 2008, 2009, and 2010,” Weber said. “The whole United States just kind of got out of that mess just in the past few years. This has been one that has really focused itself on — concentrated in — the hospitality, the leisure, the travel, the tourism, arts, and entertainment sectors of the economy, public-facing sectors. Those jobs, those industries, are very public-facing.”
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