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Birmingham delays FY 2021 budget by three months due to COVID-19

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By Erica Wright
The Birmingham Times

Dealing with the uncertainty of its finances amid the COVID-19 public health crisis, the city of Birmingham will postpone its FY 2021 budget for three months, Mayor Randall Woodfin said Tuesday.

According to the Mayor-Council act, the mayor must present his budget to the council by May 20 each year. The fiscal year begins July 1.

The plan is to present the budget to the city council on August 20 with the budget going into effect October 1, he said.

“The uncertainty surrounding the financial impact along with quantifying possibilities of second and third waves on future financial resources makes it extremely difficult to forecast operations with any degree of accuracy,” said Woodfin. “It is therefore the position of the finance department that the normal process of budget development be postponed until we have better data estimating both the short term and midterm operational impact of the pandemic.”

Most of the city’s revenues come from sales taxes and is expected to generate less money as a result of the pandemic. Woodfin said the city is expecting “anywhere from a $75 million to $110 million impact on the 2021 budget.”

“As such, we need to be strategic, intentional and fiscally responsible as we develop the 2021 budget. As a result of the current economic situation, the finance department recommends delaying the budget process for three months until September 30, 2020. We’re hopeful that this will provide more time to receive data to better understand and assess the impact of the pandemic to the city’s tax revenue base.”

Meanwhile, the city will continue to operate with the 2020 FY budget with certain cost modification that are still being identified, said Woodfin.

The proposed delay raised questions for some on the council.

Council President William Parker said “ongoing” conversations are needed between the mayor’s staff and the council about the budget delay that should include a blueprint moving forward.

“We understand as we open up the city, we have to have that balance and now we have to deal with the economic fallout of dealing with COVID-19 so it’s going to be all of us working together to be able to assess short term and long term strategies,” Parker said.

“How do we get funding out of the $3 trillion [stimulus] package that’s moving through Congress? How do we get funding from the $1.8 billion passed [by the Alabama Legislature] … how do we tap in with various resources and also grants that we can help to provide some additional one-time funding for the city? We’re all going to be working together to address the short falls and move forward as a city.”

In other business, the City Council voted to extend the city’s ordinance requiring face coverings in public spaces until Friday, May 29.

Hoyt said the measures approved by the Council on Tuesday are focused on educating the public on the dangers of COVID-19 as opposed to being punitive restrictions.

“This is to raise awareness and the seriousness of wearing a mask,” Hoyt said. “There are still folks that are being very cavalier about wearing face coverings in public. This ordinance just underlines how serious this situation is. The numbers haven’t gone down in Jefferson County. I want to see an all out campaign on why this is important and how serious this virus is. We have to do whatever we can to raise awareness in order to save as many lives as possible.”

Updated at 12:51 p.m. on 5/20/2020 to correct the amount of stimulus funding passed by the Alabama Legislature.