2021-43 Ordinance Amending Budget for Fiscal Year 2021

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July 29, 2021 TO: Mayor Julie Moore Wolfe & Decatur City Council Members FROM: Scot Wrighton, City Manager RE: Ordinance Amending FY 2021 Budget, Allocation of CURE/ARP and other Unanticipated Revenues, Assignment of New Expenditure Categories On May 14 and July 6 of this year, the City Council discussed and gave direction to staff about how it wanted to allocate reimbursed General Fund revenues from CURE payments, and the 2021 installment of ARP funding. These comparatively large changes to the current budget are the primary subject of the amending ordinance now presented for council action. The proposed ordinance reflects the direction provided by the City Council on May 14 and July 6, 2021 concerning the use of reimbursed CURE funds and ARP funds. First, regarding ARP, after including the uses tentatively approved by the City Council during previous meetings, more than $1.7 million remains unallocated. This number differs from the expected remainder because the amount of ARP revenue replacement is less than expected. The amount of revenue loss reported to the City Council during the pandemic reflected the 2020 budget shortfall. But the Treasury Department's replacement revenue calculation method requires that the claimed amount be based on the difference between the 2019 and 2020 actual revenues. In short, the unallocated ARP monies increased because we are claiming less revenue replacement. It is recommended that this unallocated amount remain in ARP Fund 99 and in reserve until the City Council determines other ARP-eligible uses for these funds. Second, regarding reimbursed CURE funds, the city received $3,140,263 in CARES State distributions ear-marked for local government. In May, I projected that about one-third of this amount would be spent on COVID eligible expenses that were not included in the budget, and that the other two-thirds was to be returned to the city as reimbursed public safety payroll costs and could thereafter be re-allocated. In fact, we now estimate that COVID expenses will be $1,437,726 (45% instead of 33%of the total). This means that reimbursed General Fund costs available for reallocation are $1,702,537. In May,the council directed that these monies be reallocated one-half to land acquisition/derelict building demolition/&site clearing, one- quarter to fire station and other equipment costs, and one-quarter to rebuilding General Fund reserves. I have altered this distribution slightly in the proposed ordinance because funds have been set aside in both the CURE reimbursement and ARP reimbursement for equipment costs and fire station costs in the amount of$850,000 in the aggregate, and because ARP-funded one-time public safety expenses will include some capital and equipment expenses. An additional allocation for demolition/land acquisition and clearing costs is set at$1 million,with the remainder to be applied to improving the General Fund reserve.