City of Birmingham to delay 2021 budget due to COVID-19

Local, county and state governments in the United States are facing “near catastrophic financial losses” due to the ongoing COVID-19 pandemic, said Birmingham Mayor Randall Woodfin on Tuesday, May 19, during his weekly report to the City Council.

The Magic City is no exception, Woodfin said.

The city will face an estimated shortfall ranging from $75 million to $120 million in the Fiscal Year 2021 budget, he said.

Such a deficit would necessitate “major reductions and austerity measures” for the city, Woodfin said.

Not only that, but uncertainty regarding the full scope of the fiscal impact of COVID-19 — including the possibility that there could be second and waves of infections — “makes it extremely difficult to forecast operations with any degree of accuracy,” Woodfin said.

Because of this uncertainty, the mayor told the Council that the city’s Finance Department recommends delaying the budget process for three months until Sept. 30, 2020. 

“We are hopeful that this will allow us time to receive data and better access the impact of the pandemic to the city's tax revenue base,” the mayor said.

The plan is to present the budget on August 20 and have the budget become effective on October 1.

In the interim — from July 1 through September 30 — the city would operate using its Fiscal Year 2020 budget with some cost adjustments based on the projected loss for that 3-month period.

Those cost adjustments “are still being identified, evaluated and quantified” and would be presented before the end of Fiscal Year 2020, Woodfin said.

 “We need to be strategic, intentional and fiscally responsible as we develop their 2021 budget,” he said.

OTHER BUSINESS

• The Birmingham City Council voted unanimously to amend the city’s COVID-19 shelter-in-place ordinance, which is to remain in place at least until Friday, May 29. According to the amendment, businesses must comply with the order of the State Health Officer that was issued on May 8. To read those guidelines, click here.
• The Council also voted to extend the city’s ordinance requiring face coverings in public spaces until May 29. To read the ordinance, click here.
• In another item related to COVID-19, the Council approved an amendment to the city’s project agreement with local tech company Shipt Inc. in which the city’s next incentive payment to the company will be deferred for one year. Shipt agreed to defer its receipt of this year’s payment for one year due to the pandemic. In July 2018, the Council approved an agreement with Shipt in which the city would pay incentives to the company for five years, with an overall payment cap of $1,762,000. In return, Shipt was to hire 881 new employees over that period.In addition to the deferral of this year’s payment to Shipt, one year will be added to the payment term of the agreement (i.e., the 5-year payment term will become a 6-year payment term). 
• The Council also approved an amendment to the city’s grants fund budget for the fiscal year ending June 30 and appropriated $400,000 to Birmingham Municipal Court for substance abuse and mental health services. The money comes from the second year of a 4-year federal grant received by the city.