Lancaster city is furloughing roughly 12% of its employees for an indefinite period of time in an effort to save taxpayer money during the COVID-19 shutdown.
Already facing a nearly $3 million deficit in its 2020 budget, the city is projecting it will lose an additional $4.7 million in tax and fee revenue this year due to economic slowdown.
Mayor Danene Sorace delivered the news to the 69 full and part-time employees in a Zoom meeting earlier this afternoon, explaining the necessity given the financial challenges facing the city.
“COVID has expanded that,” Chief of Staff Jess King said of those challenges. “There are just a lot of unknowns and in that we have to reduce to save expenses.”
Impacted departments are police, community planning and economic development, and administrative services. No patrol officers are among the police staffers being furloughed. An additional 59 public works employees are being shuffled from their normal duties.
The employees will retain their healthcare, King said, but will not be paid for the extent of furlough. The employees will be eligible for unemployment.
Some of the full-time employees are not being furloughed entirely but are facing reduced hours.
The move will save the city an estimated $75,000 a week, mostly in salary and operating costs, Business Administrator Patrick Hopkins said. Additionally the city has found approximately $1.2 million in savings through hiring freezes and savings in operations costs.
That still leaves a $6.4 million hole in the city’s 2020 budget. Hopkins said he anticipated a 30% reduction in revenue to calculate those figures.
“‘There is still some work to be done to see if those worst case scenario revenue projections are going to pan out,” he said. “If those aren’t all reduced by 30% we will be better off that that $6.4 million projection.”
However, greater than 30% would result in more revenue loss than the city saw during the 2008 Great Recession.
“The big unknown is how long will this play out, and how much of those economic activity revenues are we going to lose,” Hopkins said.
The original deficit was to be made up with money from the city’s fund balance reserve, the municipal government equivalent of a rainy day fund, which at the beginning of the year stood at roughly $15 million.
Asked if the new shortfalls might lead the city closer to needing assistance under Act 47, a state program for municipalities in severe financial distress, King said concerns on the subject have been elevated but that the city was intent on not reverting to that option.
King said the mayor is continuing to lobby powers in Harrisburg for reform on municipal taxing authority.
“We need more legislative support to ensure the health and safety of Lancaster city residents,” King said. “It’s a huge, huge concern and the mayor has been in contact with our Harrisburg delegation. … How do you get the tools through Act 47 without having to go through Act 47 and fall on your face?”