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Consumer and hospitality sectors hit hard, more than 260,000 jobs likely lost to COVID-19, City of Austin says

The Austin City Council met Tuesday to discuss some of the local economic impacts from the coronavirus.

AUSTIN, Texas — The Austin City Council met Tuesday to discuss some of the economic impacts COVID-19 has had so far on City finances, as well as projections for the future.

According to the council's presentation, Austin stands to see 261,275 potential job losses. Estimates also put the City at a tax revenue loss between $38.3 million and $57.6 million.

Experts said consumer activity (retail and personal services) and hospitality are the two sectors hit first and hardest by the virus. And the City of Austin is seeing the impacts strongest in sales, lodging and mixed beverage taxes.

One figure provided by the City suggests hotel occupancy is down 95% compared to the previous year.

"Nobody was projecting this crisis," said Mayor Pro Tem Delia Garza. "We knew that we were going to see some possible shortfalls in our budget. Thankfully, there's things in place to help us get past those shortfalls."

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According to the briefing the council received Tuesday, healthy reserves and conservative budgeting practices put the city in a strong starting position.

"We're not in a place that we would have ever asked to be in," Garza said. "I think we're in a good place in that we do have reserves to be able to to to spend with – depending on the need." 

Some of the City enterprise funds severely impacted by the coronavirus include:

  • Hotel occupancy taxes: The virus has impacted programs at the Convention Center, Historic Preservation, Cultural Arts and Music Funds
  • Airport revenue: There has been sharp declines in parking and landing fees, as well as concession revenue
  • City parking fees: Fewer people are paying to park in Downtown Austin

Meanwhile, Austin Energy and Austin Water have seen a moderate impact from COVID-19. Reductions in commercial usage have been partially offset by increased residential usage. Rate reductions and tier changes for residential customers are also being put in place.

While the numbers may appear intimidating, the City says it is starting from a strong financial position with healthy reserves. Its General Fund reserves are currently $25.7 million above its policy level of 12%. And the Austin Convention Center, Austin Energy, Austin Water, the airport and Development Services all have reserves dedicated to mitigating temporary revenue deductions.

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The City also reported that 70% of its General Fund revenues are not impacted by COVID-19.

However, the City is also spending quite a bit because of the virus. About $1.3 million has been expended through the end of March for emergency management, staff safety, public outreach and assistance, personal protective equipment and medical waste disposal contracts. And an additional $8 to $10 million is projected through the end of May.

More than $28 million in budget amendments could also be allocated toward hotel leases for sheltering and quarantine, a COVID-19 direct relief ordinance and enhancement of Austin Energy and Austin Water customer assistance programs. Those items are on the April 9 agenda.

RELATED: Austin City Council to consider additional $15 million in pandemic relief

Currently, the City is expected to get $150 million from the federal stimulus package passed by Congress last month.

In the meantime, the City is saving money by a temporary hiring freeze on more than 590 non-essential positions. Departments also decreased discretionary funding budgets, which in total could save about $14.4 million.

An overview of the council's presentation can be found in the links below:

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