Cleveland Facing Millions In Lost Revenue Due To COVID-19 Pandemic

Cleveland City Hall
The City of Cleveland has not yet scheduled any layoffs or furloughs. [Matt Richmond / ideastream]

The City of Cleveland is facing a decline in almost every revenue source due to the coronavirus pandemic.

No layoffs or furloughs are scheduled at this time, according to Mayor Frank Jackson’s office.

The city is anticipating major losses in a few areas, said Director of Finance Sharon Dumas, particularly the entertainment and hospitality sectors. Before the virus, initial projections anticipated $40 million in revenue from those areas in 2020, Dumas said, but the city now expects to see just half that amount.

“Our challenges continue to be some referendums around withholding taxes that we intend to meet head-on, and of course instability in particularly our small business sector,” Dumas said Thursday.

The city also anticipates a loss of 6 to 8 percent in income tax revenue, totaling a loss between $26 million and $35 million. Year-to-date 2020 activity shows a $13 million deficit at the end of July, Dumas said. Cleveland began 2020 with reserve funds of about $43 million, she said, and officials are monitoring any additional changes in revenue.

“We’ve never seen a situation like this and never had to kind of monitor and survive in this situation financially,” Dumas said.

While the city is still able to hold off on layoffs at this point, expenses are being cut back wherever possible, Dumas said. A hiring freeze instated earlier this year is still in effect, she said, and the city is trying to keep expenses related to staffing and operating costs between 84 and 86 percent.

Cleveland officials are anticipating stimulus funding from the federal government’s second coronavirus relief package, Dumas said, and are examining ways to use that funding to offset lost revenue and additional, coronavirus-related expenses, like personal protective equipment and sanitization measures.

“If in fact we do get to that point that furloughs and layoffs are inevitable, we are prepared to turn that around very quickly,” Dumas said.

The city monitors the financial impact of the pandemic consistently, said Mayor Frank Jackson, and is evaluating potential cost-saving measures such as potential layoffs on a weekly basis.

“It is something that we look at on a weekly basis, so our reality is based on whatever’s happening in the immediate moment,” Jackson said. “As we begin to see the trends going in a way that it is eating up that reserve to the point that we can’t make it to the end of the year or have a safe cushion for next year, then we will make that decision.”

Hearings have begun for businesses cited with violations of coronavirus safety mandates. Most Cleveland businesses have been following and enforcing the mandates, said Public Safety Director Karrie Howard.

But six citations have been issued at this point, Howard said, and more from this past weekend are still being evaluated. A majority of complaints are against private individuals, Howard said, but citations have focused on businesses.

City officials also provided updates on several programs aimed to assist both residents and local businesses.

More than 80 loans have closed under a program providing aid to businesses struggling to cover expenses during the pandemic, according to Director of Economic Development David Ebersole, amounting to $821,000 in aid. About half of that has already been distributed, he said.

The city was recently approved for an additional $3.6 million in lending authority for additional awards, he said.

Another $1.45 million also has been approved to help cover costs for businesses damaged during the May 30 protests against police brutality and the subsequent riot Downtown, Ebersole said. Ten people were indicted by a Cuyahoga County grand jury in those incidents Wednesday and investigations into more participants in the violence are continuing.

The city also is finalizing contracts with partners to provide rental assistance for residents, said Assistant Director for Community Development Michiel Wackers. Those programs are already up and running, he said, and are expected to be operating at full capacity by Sept. 14.

“These programs are being implemented at the same time they’re being stood up by our partners,” Wackers said.

Police Chief Calvin Williams also provided an update on Operation Legend’s work in Cleveland. Homicides are up about 24 percent from this time last year, Williams said, and crimes such as robberies and felonious assault are also up.

But Operation Legend gotten close to 100 guns off the streets of Cleveland, he said, and initiated about a dozen investigations into “violent crime enterprises.” The operation is still not fully staffed, he said.

“All of our partners, including the City of Cleveland Division of Police, are working towards making sure we get that staffing in place here real soon,” Williams said. “But even with the staffing that’s available to them now, they’re having tremendous success out there combatting violent crime.”

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