Menifee reviews first quarter economic impact from COVID-19

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The Menifee City Council heard an extensive report on the financial impact of COVID-19 in the first quarter of 2020-2021 and what Menifee has done to help businesses during the pandemic at their Wednesday, Oct. 21, meeting.

Rochelle Clayton, deputy city manager of Menifee, made the quarterly report for the council. The financial impact report explored only the first quarter of the fiscal year from July through September 2020. She said that even though most of the quarter’s revenue was included in the report, the sales tax revenue, which is a large part of the city revenues for the year, still has not been received and will not be known immediately.

The city’s general fund budget for fiscal year 2020-2021 was revised after the pandemic began, following stay-at-home orders and business closures were announced by the governor of California. Clayton said, “The city staff carefully reviewed the budget and met with the city’s tax consultant, HdL Companies, to present a fiscally responsible budget. Ultimately, the preliminary general fund revenue budget was cut by approximately $5.4 million and the preliminary expenditures budgets were held to fiscal year 2019-2020 levels, or a reduction of about $4.1 million.”

Those cuts included freezing 12 vacant positions, reducing general fund funding of capital projects and other various expenditure reductions. The adopted budget document contained conservative revenue estimates and expenditure budgets reflecting the uncertainty of the current economic outlook, Clayton said. The most significant impact of COVID-19 was seen in a reduction in the city’s sales and use taxes in the first quarter of fiscal year 2020-2021 with the sales tax distributions from the state being delayed.

Budget may be met.

She said however, the development revenues received in the first quarter of 2020-2021 fiscal year are an average of 20% of the annual budget, which indicated that the revenues may meet the budget for the first quarter once all receipts are accounted for.

The report showed the general fund expenditures that are non-personnel related in the first quarter of the 2020-2021 fiscal year are an average of 13% of the annual budget with the city cautiously monitoring all expenditures.

While the 2020-2021 fiscal year impact to sales tax revenue is unknown at this time, the reduction of 12% in the April-June 2020 quarter when COVID-19 closures were first realized represents the equivalent of $627,000 reduced revenue to the city, or $1 million in general fund revenue and $1.4 million in Measure DD sales tax revenue for the year if the reduction is held to 12%.

Though many businesses that remained operating in April-June 2020 have since closed permanently, so the long-term impact was expected to worsen.

Clayton said, “Overall it is difficult to determine the short and long-term total impacts of the COVID-19 pandemic, as many businesses in the city continue to remain closed or are operating at a minimal level. City staff are closely monitoring the impacts as well as prudently monitoring expenditures. Staff will continue to keep council updated with quarterly reports of COVID-19 impacts.

“The actual fiscal impact is yet to be fully determined,” she said.

The report details were shown on slides to the council. The slides are available to the public on the city website, http://www.cityofmenifee.us, under the Oct. 21 city council agenda packet.

Businesses still confident

Looking at the COVID-19 pandemic’s impact on the city’s business community, the council received and filed a report made by the county Economic Development Department and the city’s annual Keep Existing Employers Profitable Business Walk, a part of the Menifee Valley Chamber of Commerce, and Menifee’s memorandum of understanding.

The report identified the need for business assistance and connected businesses with available support resources. It probed their sense of advantages and disadvantages in Menifee, including issues such as the desirability of and potential for bringing key suppliers or business service firms to the city and identified needs for coordinating operational or expansion requirements with local regulatory bodies.

The survey revealed how many businesses applied for funding assistance and which type of funding. The surveys found 67% of Menifee businesses applied for some form of financial assistance. The finding allowed the city staff to share resources with those who did not apply and shared other various resources that businesses may be eligible for outside of the funding for which they applied.

The report said of the businesses surveyed in June 2020 and reported back in July 2020, 92% were highly or somewhat confident that their business would recover from the pandemic.

The council praised the finding that most city businesses remain confident they will reopen after the pandemic crisis eases and praised the city staff and the Menifee Chamber of Commerce for finding different ways of helping the local businesses in the COVID-19 state and county mandated shutdowns and restrictions.

Menifee joins JPA

The council unanimously agreed to enter into a contract with the Animal Services Joint Powers Authority which many cities in southwest Riverside County use to shelter abandoned and lost animals. The animals in the JPA, including the county, Canyon Lake, Lake Elsinore, Wildomar, Murrieta, Temecula and Menifee, are sheltered at the Animal Friends of the Valleys in Wildomar.

The city, beginning Nov. 1, will pay $341,382 yearly, which is $28,448.50 monthly, for sheltering services and animal control officers who work with the city police department.

The membership covers Menifee’s portion of bond principle and interest payments incurred by the JPA. Councilmember Greg August was concerned about the bond repayment and asked when it would mature and if the JPA is sued for nonpayment would the city be partially responsible for paying the remainder of the bond. August was assured that in that case the liability would remain with the JPA and shelter. The city is considered a member and not a recipient of the bond. The city could at any time drop out of the JPA without penalty.

Tony Ault can be reached by email at tault@reedermedia.com.