La Center is expecting to lose nearly 34 percent of its general-fund revenue as a result of the novel coronavirus pandemic, drastically altering a previously promising economic picture.
The city now expects about $2.75 million in revenue this year, down $930,374 from its projection when the city council adopted the annual budget before COVID-19. However, the city currently expects to need to cut only $187,552 in expenses — nearly 5 percent — due in part to $4.9 million in reserve money.
The result could be a $713,000 deficit this year, instead of the previously expected $29,822 surplus.
The economic shutdown as a result of the pandemic began in mid-March. In the first financial quarter of the year, January through March, city revenue was up $102,660, or 16 percent, compared with the first quarter of 2019.
“But for the COVID-19 issue, your first quarter actually had very good performance in terms of the revenues,” Paul Lewis, the city’s financial consultant, told councilors during a meeting Wednesday.
The city expects to lose nearly 27 percent of its tax revenue, along with similar decreases for licenses and permits, charges for goods and services, fines and forfeitures and other funding streams. When property taxes come due at the extended date of June 3, the city is projecting a rise in delinquencies between 7 percent and 10 percent.
“It was very impressive,” Mayor Greg Thornton said of the city’s economic direction before the pandemic. “So it’s very disappointing that this is happening at this particular time when we were moving forward.”
Cardrooms closed
Of all the revenue hits, the largest will come from the temporary closure of the city’s two cardrooms, The Last Frontier Casino and Palace Casino.
Taxes from the cardrooms account for more than one-third of the city’s budgeted revenue. Due to the closures, the city expects to lose $500,000.
City officials are hopeful, however, that the cardrooms will not need to close permanently.
In April, the council approved an alternative tax agreement for the cardrooms that allows them to delay $78,000 in tax payments for February and March. The payments will be due in increments beginning 30 days after the cardrooms are allowed to reopen.
Lewis told councilors Wednesday that cardroom owners expect to resume operations within a week or two after the state allows them to reopen.
“We’re anxious for them to start operating again for sure,” Thornton said.
Two other cardrooms — Chips Casino and New Phoenix Casino — closed in the years ahead of ilani Casino Resort’s opening in April 2017.
The city built its robust reserves in response to the turbulence around cardrooms in the city, Thornton said.
“Right now it’s very useful,” Thornton said. “It’s comforting to know that we have that level of reserves.”
To partially offset the revenue hit, the city also expects to leave vacancies in several departments unfilled.
The overall revenue decrease is one of the largest in Clark County. Projections are subject to considerable change, however, due to factors like sales tax revenue, which municipalities don’t see for two months after purchases.
“We just anticipate weathering this storm and moving forward,” Thornton said.
