City leaders take voluntary pay reductions to help offset revenue shortfalls from coronavirus pandemic
photo by: Mike Yoder
As the City of Lawrence anticipates revenue losses related to the coronavirus pandemic, some local leaders are voluntarily giving up a portion of their salaries to help the city’s bottom line.
But they don’t expect those contributions to be antidotes, and they’re still preparing for the need to make significant budget cuts.
At their most recent meeting, Lawrence city commissioners voted unanimously to forgo their salaries for two weeks, and the city’s top four officials will also be taking voluntary two-week furloughs. Though cuts to the commission’s relatively low salaries do not generate much revenue, Commissioner Lisa Larsen, who suggested the reduction, said she did so to support the actions of city management and prepare for upcoming budget discussions for 2021, which will begin next month.
“I think going into this budget season, especially the beginning of it, that it’s an opportunity to stress that we definitely are in a very unusual situation with our budget and likely having pretty significant shortfalls,” Larsen said. “And I’ve always been a believer that if there’s going to be cuts we need to start at the top and work from there.”
Commissioner salaries increased this year for the first time in 20 years, and the city’s elected leaders now make about $22,000 annually. The temporary salary reduction approved by the commission, which is the equivalent of a two-week furlough for all five commissioners, generates $4,568 for the city, according to Finance Director Jeremy Willmoth.
At the time the pay reductions were approved, Mayor Jennifer Ananda said that they were a symbolic gesture more than anything. However, Ananda said that as a single mother who was still paying off her student loans, the money was part of her budget, and she took the move seriously.
“I think it would be smart to point out that this is a gesture and nowhere near to addressing the budget shortfalls that we are experiencing,” Ananda said. “The sacrifices that other staff may make will probably have a more profound impact. And again, it’s still not going to solve our budget issues.”
The city manager and the three assistant city managers will each be taking voluntary two-week furloughs in 2020, and are planning to do so again in 2021, according to city spokesman Porter Arneill. City Manager Craig Owens and assistant city managers Diane Stoddard, Casey Toomay and Brandon McGuire are the city’s most senior officials and among its highest-paid employees. Arneill said the two-week furloughs that city management will take in 2020 will generate $45,197 in savings for the city.
Though the city is referring to the actions as furloughs, or unpaid leave, that doesn’t necessarily mean the leaders won’t be working. No City Commission meetings have been canceled as part of the furloughs, and Larsen said she expected the commission would still be working to address the needs of the city. Arneill said whether commissioners and city management work during their furloughs will depend on circumstances, but if they do it will be volunteer time and not paid.
Lawrence is not the first city to reduce employee pay as it prepares to deal with budget shortfalls related to the coronavirus. In April, Topeka’s city manager and city council members voluntarily accepted a temporary 6% pay cut, and the city manager is reducing salaries for management and executive staff by 3% and asking city employees represented by eight labor unions to also accept a 3% pay cut, according to The Topeka Capital-Journal. Closer to home, the University of Kansas announced Friday that every employee who makes an annual salary over $50,000 will see a scaled pay reduction over six months, ranging from 1% to 11% of their pay, to help the university manage the unprecedented impacts on its budget.
Exactly how the approximately $50,000 saved from the furloughs will fit into the city’s budget is still unknown.
The commission received updated 2020 revenue projections in May to account for the pandemic and resulting economic slowdown. The projections include three potential scenarios, based on an economic slowdown that lasts either three, six or nine months, with the three-month duration meaning conditions return to normal June 1, as the Journal-World previously reported. Most of the impact would be seen in the general fund, with the revenue hit projected to be about $7.8 million for a three-month slowdown, $9.8 million for a six-month slowdown and about $12 million for a nine-month slowdown.
Those projections are just that, however, and the city has only seen a glimpse of what the actual financial impact might be. The city’s May sales tax collections, which represent sales made mostly in March because of normal delays in reporting, were down 7.1% compared with the same period a year ago, as the Journal-World reported. That drop amounts to about a $150,000 hit to the city’s finances.
Meanwhile, the city’s budget discussions for 2021 are quickly approaching. The city manager’s recommended budget for next year will be presented to the commission at its meeting July 14, and Willmoth said he anticipates providing updated revenue estimates at that time.
Larsen said that until the commission sees those numbers, it will be difficult to say exactly what budgetary actions might be necessary. But going into budget discussions, her mindset is that the city is going to have to increase its efficiency as much as it can. She said that while she always looks for opportunities for potential cuts as part of the budget process, this year would be different.
“This year obviously provides some much more significant challenges, and we’re going to have to reach in probably deeper than what we have in the past to take a look at those opportunities,” Larsen said.