At the regular Moab City Council meeting on May 12, the city’s budget was the main topic of discussion. Like the county government, even before COVID-19 wreaked havoc on the national and local economies the city was already making tough decisions to balance their budget.
Also like Grand County, Moab City relies heavily on tax dollars collected from tourists for their income.
With the evaporation of the usually high-visitation spring season due to the pandemic, Moab’s financial situation is looking grim.
While the re-opening process is controversial, Moab’s budget relies on it, as Linares bluntly illustrated.
“We have a duty as a municipality to provide services and to provide water and sewer and these essential services that keep everyone safe, and that’s our overarching goal,” he said, “but at the end of the day, our revenue streams are 100% dependent on the tourism industry and the rec[reation] industry. ”
“There’s literally nothing to compare our projections to,” said Linares. “The 1918 Spanish flu? Different economy. It just doesn’t work. We can’t even go pull from 9/11 or the crash of 2008, the Great Recession—it’s not the same thing, it’s not having the same effects.”
Predicting a shortfall
“Our sales base tax is what’s really being affected by COVID,” said City Finance Director Klint York.
Before the pandemic hit, the tentative budget for total sales tax was $9.5 million for the 2020-2021 fiscal year. At the council meeting, York created two possible scenarios for the remainder of the year. The first shows a gradual recovery to 80% of normal tax revenues through next January. The other scenario shows a 50% recovery through the budget year.
In the first scenario, the city would be short about $3.1 million in sales tax revenue; in the worse scenario, the shortfall would be about $5 million.
Sales tax revenues show up in Moab’s accounts about two months after they are collected, so the most recent amounts received reflect what was collected in March.
York said that that amount was about 66% of what it was last year for the same time. That’s about 15% more than what city staff had feared, but the city is still looking at a serious loss of revenue.
“All months are not created equal when you live in Moab,” quipped Linares, noting that if the pandemic had hit a few months earlier, during Moab’s quiet winter season, the effect would have been much less significant.
York also presented options for where cuts could be made in categories like operations, maintenance, deferred capital spending, deferred inter-local agreement spending and personnel spending. Many of the cuts have already been enacted earlier this year, as city staff tried to balance their revenue and spending.
York said the city will still likely have to look at drastic reductions in payroll costs.
“When COVID started, there wasn’t a lot to go back and cut,” City Manager Joel Linares pointed out, referring to employee benefits, overtime and leave pay. “We had already cut a lot of staff’s benefits to begin with.”
67 city employees have been laid off or furloughed since March 12, including staff from facilities that remain closed like the Moab Arts and Recreation Center, the Moab Aquatic Center and City Hall itself.
However, those cuts are not enough to make up the deficit.
Other options presented to help balance the budget include further cuts to “nonessential services,” instituting a tax to support recreation, arts, and parks services, and other spending reductions.
“There’s just no avoiding the situation we’re in, we have to be responsible stewards of the taxpayers' money,” said Linares. “We can’t wait until we go bankrupt, we have to take action.”
He added, “We’ve cut pretty much everything that we can cut, and there are still more cuts to benefits to employees that are coming. We’ve hacked the budget to the tune of 1.6-plus million. We’re to a point where we can’t save the amount of money by cuts.”
The City Council had discussed instituting a “RAP” tax, or Recreation, Arts, and Parks tax, prior to the coronavirus pandemic. Linares said that it could offer a small boost to the budget.
“It’s essentially the only tourist sales-based tax that the city of Moab has never turned on and never initiated,” he said.
The tax would add 0.1% to the existing sales tax, excluding regular grocery purchases.
“The majority of this tax will be paid by tourists,” Linares said, as the tax would be levied on restaurant dining and sales of goods.
The proposed tax would have to go on the ballot for voters to approve. Linares said the city would hold public hearings to familiarize the public with the concept. If citizens do pass the tax, it will be in place for the next ten years, at which point it will have to go through the same process to continue.
“In a non-COVID year, this could create $300,000 to $400,000 in revenue,” Linares said.
Those funds would be earmarked for recreation, arts and parks and could replace money coming from the city’s general fund, allowing those funds to go toward other needs.
“We’re trying to find a way to keep those things that make our core identity as Moab and as a city, while at the same time freeing up money to go into re-doing our infrastructure,” said Linares.
Pool remains too expensive to open
The Moab Recreation and Aquatic Center, or MRAC, is one non-essential city service that is much beloved by residents but operates at a loss for the city.
Linares addressed claims that the facility cost as much to keep closed as it would to open. Linares said it costs $22,000 to $30,000 a month to just staff the facility, and that doesn’t include utility and maintenance costs.
He questioned how the city could explain opening the facility when in such dire financial straits.
“How do you justify laying someone off when you’re running a pool for $30,000 a month for ten people to go swim?” he asked rhetorically.
Looking for federal support
Another possible source of financial assistance is the federal CARES stimulus package.
Moab Mayor Emily Niehaus said she has been discussing with the Utah League of Cities and Towns the allocation of Utah’s share of that funding.
Some of the CARES money was specifically allocated to two major population centers within Utah; the rest is left for the state to decide how to divide among the remaining areas of the state.
“I’m working hard to advocate that little cities like us don’t get left out,” said Niehaus. “Unfortunately it’s population-based—and it’s not the population of visitors, it’s only residents.”
Considering the impact of tourism
Councilmember Kalen Jones reported that he had attended a Travel Council meeting where members said they had observed an increase in tourism, Moab is still well under current visitor capacity.
Jones also reported the Travel Council discussed a shortage of public restroom facilities for tourists who are using take-out options at restaurants. They discussed the possibility of opening the Moab Information Center restrooms for visitors, but MIC representatives noted that they are understaffed and might be overwhelmed by maintaining the restrooms if they are opened for use.
Jones also noted that some businesses say visitors aren’t wearing masks or practicing social distancing.
“There’s a perception among the businesses that the people that are visiting now are relatively risk-tolerant,” said Jones.
“I’m getting a lot of feedback that employees are feeling concerned that customers aren’t wearing masks,” Niehaus agreed.
Councilmember Karen Guzman-Newton, who is also an owner of Poison Spider Bicycle Shop, said that at her shop they are requiring customers to wear masks before entering their business.
“99.9% have been so awesome about it,” she said of customer compliance.
Guzman-Newton also mentioned some assistance programs available for businesses. The state is offering “PPE [personal protective equipment] Push Packs” for small businesses, which include items like masks, gloves, gowns, and disinfectants, tailored to the type of business requesting the supplies.
A lighter note
Niehaus and Linares mentioned plans in the works to celebrate seniors graduating from Grand County High School with a parade on Main Street to make up for the loss of traditional graduation ceremonies and celebrations. They are discussing options with the school district and the Southeast Utah Health Department.
Niehaus said she is also working with the Youth Garden Project and the Southeast Utah Health Department to bring a public market back to Moab. Moab’s Farmer’s Market, which used to take place on Fridays at Swanny City Park, has been defunct since 2018.
Niehaus said she envisions a new market on the front lawn of City Hall, during which Center Street could be closed to vehicle traffic and vendors would not be limited to farmers, but could include casual gardeners with a bumper crop of vegetables to sell.
On the note of gardening, Councilmember Mike Duncan said he had planted new annuals in the basket on his front porch.
“It definitely cheers me up,” he said.
Councilmember Tawny Knuteson-Boyd said she had been gardening a lot lately as well.
“I thought that gardening would be a lot cheaper than therapy—it’s not,” she said. “I have an addiction!”