Pikeville officials remain hopeful about their upcoming fiscal year’s budget in the face of the economic impacts of the COVID-19 response, but are also preparing for the worst.
In a budget work session held May 26, city officials presented a budget for consideration and later a vote by the Pikeville City Commission which prepares for the potential blow from the crisis by cutting at least 10 percent from each city department’s discretionary spending in the coming year.
City Executive Finance Director Tonya Taylor said that, in most past years, the city has set its budget with revenue numbers that are traditionally exceeded because. However, Taylor said, this year, the expectations are different.
“This year’s a little bit different,” she said. “We kind of kept the same numbers. Because of everything going on, we don’t anticipate we’ll exceed those numbers a whole lot. Hopefully, the economy can start pulling out, and we will.”
Some of the revenue is expected to be down, Taylor said, including in areas such as occupational tax, business license tax, the city’s alcohol beverage tax and hotel/motel tax, as well as municipal road aid.
Despite the potential challenges, Taylor said, no proposed tax increases are factored into the draft budget.
“We do expect property tax to remain constant to where it’s been the previous years,” she said.
Occupational taxes, one of the city’s largest funding sources, are an unknown factor and the full impact of what’s happening right now will not be known until next year.
“We won’t know how this quarter is going to be ... until July of next year, when they’re actually due,” she said. “We do expect those receipts to be down.”
Taylor said the budgeting was done with the idea that the economy would begin pulling out of the pandemic effects by mid-August.
“We’ll make the budget, but it’s going to have to be monitored,” Taylor said. “It may have to be adjusted, but hopefully it will be adjusted upward rather than downward.”
Taylor said the city is seeing some businesses reopen slowly.
Taylor said Pikeville City Manager Philip Elswick asked all department heads to make a 10 percent cut in the upcoming budget in discretionary funding, in areas where cuts can be made.
Elswick said the city’s department heads responded.
“They really bought into the decrease in our expenses,” Elswick said, adding the city saw overtime expenses fall to near zero when the request went out.
Another heavy funding source for the city — the restaurant tax — is also an unknown due to the COVID-19 response, Elswick said.
Pikeville’s restaurants were allowed to remain open in a limited capacity, but dining rooms have just been recently allowed to reopen. Elswick said that, in conversations with several restaurants, city officials have learned that some are opting to continue operating only as carryout and delivery, as opening their dining room to 33 percent capacity would not allow them to operate effectively.
As a part of the budget cuts for the upcoming fiscal year, Elswick said, the city has suspended many projects, including a traffic study on the Thompson Road/Cassidy Boulevard area, surveying work and proposed annexations. Other projects, however, such as the work being done on Second Street, have continued.
“We stopped most of our engineering/architecture work, construction projects, but we’re focused on the things that will have the biggest return for us,” he said.
Pikeville Executive Director of Economic Development Jill Fraley Dotson told the commission that there is both bad and good in what’s going on in Pikeville right now, especially in downtown.
“Oddly enough, since all this has happened, we’ve had a couple of businesses that have approached us about opening up new spaces downtown and will be applying for some incentives,” she said.
Blue Raven and Southern Biscuit and Grill are two Pikeville restaurants that have announced they will not be reopening, but others, such as Bank 253, Chirico’s and Joyce’s in downtown have all stayed open, reopened or are in the process of doing so, she said.
The city will continue its tourism efforts in the coming year, but at least one impact will be felt to one of the city’s attractions opened in recent years.
The zipline at Bob Amos Park, Elswick said, will not reopen this year.
“There have not been that many people in the past that have used it,” he said. “Every year, we’re spending $20,000 to $25,000 on maintenance and upgrades to that as a result of the certification so that seemed like a good place to cut for the budget this year.”
Elswick said that the city may take another look at that in the future and reopen, if possible.