Concerned with possible 20% to 40% losses in sales tax revenue that could hit this summer, City Manager Jim Crosby told Yukon council members Wednesday that hard decisions are ahead due to the COVID-19 pandemic.
Crosby announced layoffs of 18 city employees on Thursday, April 9. The city council had approved a $604,000 decrease in the budget two days before the city manager announced the layoffs.
City Councilwoman Shelli Selby questioned Crosby in a study session Wednesday about the layoffs. The city manager in Yukon is authorized to hire and fire personnel without council approval. Selby wanted to know why pay reductions could not have been offered to prevent layoffs.
Crosby said he hoped further cutbacks can be avoided, but pay reductions do not offset such unprecedented sales tax slumps. He said 10 percent pay reductions, furloughs, further cutbacks, and even layoffs, will have to be considered. He said pay reductions for unionized employees must be negotiated.
Crosby said the sales tax revenue loss will be felt in June as businesses have been closed or impacted by shelter at home polices due to the coronavirus. Yukon is under a state of emergency proclamation until April 30, and that could be extended into May soon.
“We do have $7 million in our reserve and we will probably have to reach into that,” Crosby said Wednesday in the study session at the Centennial Building. The study session was televised on local cable, by Zoom and on Facebook Live. Mayor Michael McEachern wore a mask and gloves at the study session.
Crosby said the city will know how far sales tax revenue has dropped in June when reports are in from the Oklahoma Tax Commission.
Businesses started losing revenue in Yukon in March, and the downturn has worsened, he said.
“You can imagine what can happen in the city, our city, if our total revenue went down 40%, what that would mean, programs, cuts in people, all types of items and the impact it would be,” Crosby told the council.
“This is a great concern of mine,” Crosby said.
He proposed a city council retreat toward the end of May to study further needs to balance the budget.
“Hopefully we won’t have too big of a hit in May and June when we look at this and we have to balance the budget, but we are going to have to sit with the council and go through this and determine what is the best thing and in what direction do we need to go with our budget. “
He said the city staff had prepared “a real good budget” which is about $51 million a year currently, before the coronavirus hit.
Crosby said the council will need to “determine what programs we need to keep, what we need to do and what changes we need to make to budget not only for this year but next year.”
Crosby said the recovery period from the pandemic could take a year to a year and a half.
He said he has looked at possibly eliminating salary “step increases,” or furloughs, or 10% salary cuts for all employees, but the savings would not be enough to offset sales tax losses up to 40%.
“One thing I don’t want to do is have any more layoffs and have people out of work, and this is something we are going to have to do our best to protect against,” Crosby said.
He said the city currently has about 450 water customers who are behind on their bills, and the police officers are writing fewer tickets during the pandemic. Municipal courts are closed, and fines are not being paid.
“Ultimately we are going to have to have court again,” Crosby said.
As of Wednesday, officers had written 52 traffic tickets for the month of April, and normally there would be about 300 tickets written for the same time period, Crosby said. He said the pandemic has kept people behind closed doors at home, as well. Officers have to keep safe distances.
“The fear is unreal,” Crosby said.
He said future layoffs are possible for all departments with no one exempt.
“How do we want to address the problem? Because it is a major, major problem that we are all going to have to face and this is what I am gravely concerned about,” Crosby said.
He said the situation is “a changing thing.”
Read more in The Yukon Progress and at yukonprogress.com