Denver’s candle is burning at both ends as crews run through cash to stop the spread of the coronavirus while businesses suffer from widespread quarantine efforts, reducing eventual tax revenue.
Chief Financial Officer Brendan Hanlon said he recently asked all Denver agencies to scrape together millions for the effort. And City Council President Jolon Clark said he expects an administration request for supplemental cash.
The underlying priority for those requests is to quickly identify and meet the city’s needs, Clark said.
So far, Denver has spent a total of $1.7 million on equipment, supplies and facilities, according to a City Council update from the mayor’s office, obtained by The Denver Post.
The city’s Emergency Operations Center alone had spent about $500,000 as of Monday, finance department spokesperson Julie Smith said. That doesn’t include overtime or other personnel costs and the figure is expected to rise.
The overall cost, however, is higher and grows by the day. An update from the mayor’s office shared with City Council Wednesday — and obtained by The Denver Post — says Denver has so far spent a total of $1.7 million on equipment, supplies and facilities.
To raise money and cover those costs in the short term, Hanlon said he has asked city departments to cut discretionary spending on things like food or training.
“We have asked that agencies identify at least 1% of their budgets to be sequestered for savings,” Hanlon said.
That should raise about $14 million for current expenses and to cover the departments as revenue drops in the future, Hanlon said.
So far, Aurora has also spent an estimated $500,000 on combating the spread of the coronavirus, said interim spokesperson Michael Bryant.
“Obviously we anticipate that dramatically changing,” Bryant said. “Most of the expenses so far have been in employee equipment and some health-related things that are in the works.”
While expenses are expected to rise for Aurora, they’ll likely be lower than Denver’s because Colorado’s third-largest city isn’t also a public health agency, Bryant said.
Just how far Denver’s tax revenue could drop remains unclear, Hanlon said. The city’s books won’t catch up to current shortfalls for weeks or months.
“The challenge is that any activity going on right now economically, these businesses are going to collect sales and use tax during the month of March and they will have all of April to remit those dollars to the city,” Hanlon said.
Bars, restaurants, gyms, theaters and more were all ordered closed by Gov. Jared Polis on Monday. He also recommended against gatherings of more than 50 people.
State analysts have predicted Colorado’s budget could suffer an $800 million economic hit. Nationally, the White House is seeking an $850 billion stimulus package to shore up the country’s economy, The New York Times reports.
In the meantime, Denver has other tools on which it can lean, Hanlon noted. About $29 million sits in the city’s reserves and that money can be unlocked by City Council.
Denver also has its general fund reserve, a store of at least 15% of the city’s budgeted expenditures, Hanlon said. That number is fluid because the city’s expenditures change constantly, but he estimated it holds more than $200 million.
The City Council last approved tapping the larger general fund reserves about a decade ago, Smith said.
“During the Great Recession reserves were spent down to 10.7% to preserve city services while (the) city closed budget gaps of $550 million,” Smith said in an email.
The reserves equate to several months worth of revenue performance, Hanlon said.