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HomeMy WebLinkAboutAgenda - 04-23-20; Item 1 - COVID-19 Pandemic Economic Impact on the FY2020-21 Orange County Manager's Recommended Budget 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 23, 2020 Action Agenda Item No. 1 SUBJECT: COVID-19 Pandemic Economic Impact on the FY2020-21 Orange County Manager's Recommended Budget DEPARTMENT: County Manager ATTACHMENT(S): INFORMATION CONTACT: Attachment A - FY2019-20 Economic Bonnie Hammersley, Orange County Contingency Plan Manager, (919) 245-2306 PURPOSE: To receive information on the COVID-19 Economic Impact on the FY2020-21 Orange County Manager's Recommended Budget projections. BACKGROUND: The COVID-19 pandemic has caused an unprecedented human and health crisis. The measures necessary to contain the virus have caused an economic recession. At the present, there is great uncertainty about its severity and duration due to the lack of a vaccine and the public health measures which include social distancing, limited business activity and uncertainty if a second wave occurs following after achieving an apex in the number of reported cases. On March 23, 2020, the County Manager directed the Orange County Department Directors to comply with the FY2019-20 Economic Contingency Plan (Attachment A). The implementation of the contingency plan began to address the economic impact of the COVID-19 pandemic to Orange County government/residents. The strict monitoring of expenditures in the 4t" quarter helps address the immediate financial challenges and will assist in preserving County services as well as jobs to allow the County to continue to serve Orange County residents. In addition, future measures will be included in the County Manager's Recommended FY2020-21 Budget. Due to the timing of the FY2020-21 budget process and the COVID-19 pandemic, the revenue projections Pre-COVID and Post-COVID differ significantly. In an effort to manage expectations prior to the release of the FY2020-21 County Manager's Recommended Budget, the County Manager will share detailed information on the revenue projections for the BOCC at the April 23, 2020 work session. The revenue sources projected to be impacted include property tax, sales tax, charges for services including Planning Permits and Sportsplex user fees and occupancy taxes. FINANCIAL IMPACT: There is no financial impact associated with receiving this information. A financial impact on the County is anticipated from the COVID-19 Pandemic. 2 SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to this item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. • GOAL: CREATE A SAFE COMMUNITY The reduction of risks from vehicle/traffic accidents, childhood and senior injuries, gang activity, substance abuse and domestic violence. ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal impact associated with this item. RECOMMENDATION(S): The Manager recommends that the Board receive the information. Attachment A 3 FY2019-20 ECONOMIC CONTINGENCY PLAN Effective Immediately 1. Reduce Purchasing/Spend Rate (April-June)- Review General Fund, Sportsplex and Visitors Bureau encumbrances. Each director and business officer can assist on identifying discretionary contractual obligations that may be deemed discretionary during this pandemic crisis norms i.e. social distancing. • Cancel remaining travel/training; excludes certification training • NO Recurring Capital purchases the rest of the fiscal year • Cancel all discretionary encumbrances Action steps: Identify each department encumbrances/contractual obligations and potential savings as a result of encumbrance cancellations. The Sportsplex and Visitors Bureau funds are included due to revenue loss due to the pandemic impact this fiscal year. Savings estimates to be determined. 2. Close Monitoring of Revenues and Expenditures -The Third Quarter Financial Report and remaining monthly April May and June reports will be carefully reviewed and escalated to you as necessary during this recession. Action steps: Timely communication with department directors and business officers and review of budget versus actual reporting. This will provide variance analysis information on each department revenues and expenditures status, and necessary follow-up with department directors and staff continued well in advance of the end of the fiscal year. Charges for Services and Intergovernmental Revenues (Public Transit) are being monitored closely. Expenditure tracking has been implemented as well with a coronavirus account for Animal Services, Asset Management Services, Emergency Services, Health and Social Services. 3. Hiring Freeze -The hiring freeze includes all vacant county positions. Exemptions from the freeze include mandatory positions in public safety, health and human services. Action steps: Human Resources Director will monitor requests to fill positions and collaborate with the Managers office for approval. 4. Pandemic Internal Transfer- Final determination of the borrowing amount will be determined through our fiscal year-end breakeven analysis. Similar measures have been successful by other jurisdictions during the Great Recession when there is clear objective to maintain the fiscal integrity of all funds. Action steps: Finance Department will monitor the non-general fund accounts for funds that would be available to transfer to the general fund at year-end for a break-even result.