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Apr 17

City manager's message: COVID-19 Updates & FY 2021 Manager’s Recommended Budget

Posted on April 17, 2020 at 1:35 PM by Don Mann

I am writing to update you on our COVID-19 response efforts as well as the release of the FY 21 Manager’s Recommended Budget.

COVID-19 Updates

I just finished watching the Governor’s press conference which he does several times a week. Today, the Governor announced that he is extending the order for closure of certain non-essential businesses (specifically those recreational and entertainment businesses such as theaters, bowling alleys, concert venues, etc. and personal car businesses such as hair salons, tattoo parlors, etc.) from April 23 at 11:59 p.m. to May 8 at 11:59 p.m. While the state’s social distancing efforts are working to flatten the curve, models show that “returning to normal” too soon would cause a major spike in case counts. The stay-at-home order remains through June 10 at this time. Government operations, as before, are exempted from the order. However, our city facilities will continue to remain closed to the general public through the duration of these orders. 

By now, each of you working in city facilities or in the field, should have received your cloth masks. If you have not, please let me know. We were able to provide these masks to you thanks to quick action by our Emergency Management team to secure fabric and local seamstresses to make the masks. Again, I would like to thank them for their speedy action!

Our highest priority remains protecting our employees as we continue to deliver city services to our community. We continue to keep our workforce employed doing meaningful work whether in the field, through telework or in physically distanced environments. Unlike some localities, we have resisted furloughs for employees whose normal job function has been impacted (such as a community center professional whose building is closed to the public) by redeploying them to other needed functions (in the case, helping to ensure our public spaces adhere to social distanced guidelines). I want to thank you all for maintaining your unwavering commitment to excellent service even in the face of uncertainty. As I have said before, I know these times are stressful for us all, but — as is typical for our team mdash; we will get through this together. 

FY 2021 Manager’s Recommended Budget 

This brings me to some announcements about the FY 2021 budget recommended being released today. This is my 11th budget recommendation as Hampton City Manager.  While each budget has its challenges, I must say that this one has been particularly unique, not only from a budget development standpoint, but also the environment surrounding its presentation. Ordinarily, many of you would be reading this message at work, but today many are reading it as you work from home. It is amazing how quickly things have changed.  

When we started our budget development process this year, it looked like we would be experiencing the strongest revenue growth the city has seen since before the Great Recession, however, the COVID-19 pandemic has not only changed how we are working and living, but also created a great deal of uncertainty about our city revenues and budget.

If the current social distancing measures are successful in controlling the spread of the virus and the economy recovers quickly, the impact on our revenues and budget may be limited.  On the other hand, if the current social distancing measures need to remain in place for an extended period or the economy doesn’t bounce back quickly once the restrictions are removed, the impact on our revenues and budget could be significant. Faced with this uncertainty, I decided to move forward with a pre-COVID-19 budget. I did this because it gives us the greatest flexibility to deal with this uncertainty.

Our Pre-COVID-19 planning anticipated revenues that would support a 3% salary increase, along with a merit-bonus program and targeted compression adjustments to further address misaligned positions. However, given the uncertainty around the impacts of COVID-19 — everything now depends on how well the virus is curtailed, how swiftly businesses can reopen and how quickly we can all return to normal. Regrettably, this uncertainty will require us to delay the enactment of the salary increase beyond the customary July 1st date.  While I cannot say when the salary increase will come — so much depends on how quickly revenues stabilize — I want to assure you that salary increases will be our highest priority for new spending. We will be constantly monitoring our revenues with a goal of providing as much of a salary increase as soon as possible within the fiscal year.  

Even amidst the uncertainty we face, we wanted to recognize your dedication and commitment to our community. Therefore, the recommended budget includes an accelerated Citizen Satisfaction Bonus, funded with Departmental Budget Savings, that we will pay out in the first pay of the new fiscal year, as opposed to the normal December timeframe. The city will also pick up both the city share and the employee share of the increase in health insurance, so that you will not have to worry about a decrease in take-home pay. In addition to these measures the city is also paying significantly more for VRS retirement benefits in fiscal year 2021. This is due to a change in the VRS funding formulas, which required that we spend approximately $2 million more than the current year. For context, this is roughly equivalent to a 2% pay increase.

As you know, many businesses have closed or have scaled down service which means that we are already experiencing a revenue decrease due to COVID-19. Therefore, we will delay all discretionary spending and keep a close eye on expenditures for the remainder of this fiscal year and into the next. Many localities have already announced layoffs and furloughs due to the virus, but we have committed to do we can to avoid the need for such actions. We are doing all we can to stand by our employees as we have in the past, and we intend to do so in the future. 

While I am sure that delaying salary increases is a disappointment, it is the necessary and prudent step we must take at this time to protect jobs and pay. My commitment remains to review revenues on a monthly basis, and to propose the implementation of a salary increase as soon as revenues stabilize. My hope is that we will be able to do that as early in the fiscal year as possible, assuming the impact from COVID-19 is not too severe.

For those of you who have a deeper interest in the budget, I encourage you to visit our city webpage where you can review the budget in its entirety as well as watch a video Manager’s Message on the budget that covers the other areas of investment we are recommending be made when revenues stabilize.

The COVID-19 pandemic presents a great challenge for us and everyone else around the world. Regardless of what comes our way, I know our community will remain strong, our workforce committed and our our city ready to overcome any challenge laid before us. Our great and storied history has proven our strength, and I see the greatness in the people that make up our community and our workforce every day. We will get through this challenge together, like we always have, and come through even stronger on the other side as we always do. We have a great team and I know we will continue to work together, support each other and overcome this challenge.

Thank you for your continued dedication and commitment to serve our community each and every day!

Mary

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