DUNWOODY, Ga. — The city of Dunwoody is in a strong position to cover operational expenses but faces significant cuts to its capital budget as COVID-19 impacts its revenues.
The Dunwoody Budget Committee held an online meeting April 21 to discuss how COVID-19 could impact this year’s budget. Dunwoody funds most capital projects with sales and hotel tax revenue. Even if the economy quickly recovers, the money the city would have earned through sales and hotel taxes this spring is gone.
The special purpose local option sales tax, or SPLOST, dollars are the city’s largest source of capital funding and go to public safety and transportation. As of the April 21 meeting, the city is expecting revenue from the sales tax to fall $1.7 million short of what was originally anticipated, or about a 25 percent reduction.
“We’re looking at the ’08-’09 recession for estimates,” Assistant City Manager Jay Vinicki said. “It’s not the same. Until we get real numbers in, all numbers are an estimate.”
The staff’s recommendation, which was received favorably by the three council members on the budget committee, was to leave intact the $2 million allocated for police equipment upgrades and replacements and to make up the lost money by pushing back road projects.
The biggest recommended change is to cut $1.2 million from the $1.6 million budget for intersection improvements at Chamblee Dunwoody Road and Spalding Drive.
For the hotel-motel tax, the city is anticipating an even more drastic 75 percent reduction in revenue.
“This is essentially banking on no more dollars for the rest of the year,” Vinicki said.
With $1.1 million rolling over from last year’s budget, the city is expecting to keep working on Phase I of the Ashford-Dunwoody trail and designs for Perimeter Center East Park, but Phase II of the trail and lighting at Peachtree Charter Middle School would be put on hold.
The staff also hopes to stay on track with plans to convert the Waterford Swim and Racquet Club into a park, allocating $125,000 from the general capital fund for basic renovations.
“It allows us to go ahead and get the Waterford Park, not 100 percent complete, but in a condition where it can be used,” Dunwoody City Manager Eric Linton said. “We can always put more money in it later.”
A look at operational expenses paints a brighter picture. The city began the fiscal year with a reserve fund nearly equivalent to 6 months of expenses.
“This city has been incredibly prudent and set itself up in a very good position to weather this storm,” Vinicki said. “The city’s written policy has the ending fund balance between four and six months, which is actually a very conservative policy. Lots of places have it between one and three.”
City staff has cut $849,000, or 3 percent, of its regular expenses through initiatives like canceling park programs, eliminating travel and halting print editions of the Dunwoody Digest.
However, Vinicki said, there are some areas where the costs are expected to go up. IT costs are expected to climb as the staff adapts to working from home and purchasing protective equipment for public safety officers.
The 2021 budget will take shape this summer.
“Hopefully at that point we’ll know more,” Linton said. “We’ll know more about the economy, but that budget will probably look a lot different from what we thought three months ago.”