Yelm’s council needs to assess coronavirus affects on cash asap! Sales tax revenue plummeting and the economy will be slow to restart. Olympia city council already looking at fiscal impacts of COVID-19!
- Editor’s note: Yelm Council’s April 7 Study Session agenda has no plans to address the fiscal impact of COVID-19 on the city’s cash reserves.
- While Yelm Will Work With Financially Distressed Ratepayers to Defer Water, Sewer Payments,
- Sales tax and new building permit revenue will significantly drop in 2nd quarter.
- The council recently voted 5-2 to authorize a reclaimed water system design study that will use $1.89 million of the city’s $2 million sewer reserve.
- A $110,000 sewer reserve balance is little if an emergency breakdown arises!
- The next public council session is April 14th, and by then, the looming fiscal emergency impacts could well be at-hand!
- In Spring of 2018, Councilor Tad Stillwell encouraged the council to ensure funding for the purchase of the new city hall would remain intact.
- Stillwell reminded council that in the 2008-2009 downturn and at other times, the city deferred payments owed, in order to fund other new projects, which added to taxpayer’s interest expense.
- Maintenance and upgrades to the city’s reclaimed water system was deferred beginning in 2009, leading to issues there the city faces still to this day!
- However Yelm’s council will now be forced to look at deferring payments on the city hall building and other opportunities, just to conserve cash.
- Olympia and Lacey city councils are already addressing the impact of COVID-19 on their cash flow.
- Time is of the essence for Yelm to act on conserving city cash!
- In addition to public health, fiscal health is a city emergency of utmost urgency!
Olympia City Council takes action on multiple fronts to provide financial relief
“The City of Olympia began taking steps … to prepare for financial hardships caused by the new coronavirus outbreak,” by Will Rubin, The Olympian. Read more
“The $2 trillion relief bill is massive but it won’t prevent a recession”
“But economists say two key problems remain: Fixing the health crisis and getting money to people in time.
“Constance Hunter, chief economist at KPMG, predicts it will take at least six to 10 weeks for the government to get a significant amount of the money disbursed. That’s a long time for laid-off workers and small business owners with no money coming in to wait. It makes it less likely they will bounce back quickly.
“‘There isn’t some magic restart button for the economy,’ Hunter said. ‘Before the money arrives, there will be a lot of collateral damage to the economy. That’s going to make restarting it difficult.’
“James Bullard, a noted economist and head of the Federal Reserve Bank of St. Louis, put out a chilling forecast of what’s ahead for the nation in the coming months: He expects 46 million Americans to be unemployed (30 percent of workers), and an unprecedented 50 percent decline in economic output,” by Heather Long, The Washington Post. Read more
‘Recovery is going to be extremely tentative’
“‘This is not your garden variety business cycle where a sharp downturn is followed by an equally sharp snapback,’ [Economist Stephen Roach] said. ‘We can restart production, but can we really restart consumption with people still scared and unwilling to go out and socialize and spend? So, I think the recovery is going to be extremely tentative.’
“According to Roach, a drop-off in consumption will be exacerbated by spiking unemployment.
“‘The longer that the damage is done to small and medium-sized businesses, the harder they’re going to find it to re-create their old business models and rehire in a way you would expect them to do in a normal business cycle recession,’ he added,” by Stephanie Landsman, CNBC. Read more