Two years ago, city officials in Lincoln — unsure how the pandemic would affect their ability to operate as the coronavirus swept across the world and America's communities shut down — took a number of budgetary precautions.
They left positions unfilled for a number of months, delayed streetscape improvements, dipped into the cash reserve. City workers agreed to take a smaller-than-usual 1% or lump sum salary increase.
City revenues dipped, but it wasn’t nearly as dire as officials worried it might be, in part because a significant drop in sales tax revenue they’d braced for never materialized, and because of federal pandemic relief funds that helped pay for safety and health measures and supported some city services.
That’s put the city on solid financial ground.
“While some uncertainty around the pandemic still exists, the city’s financial status is in good shape and poised to support the continued growth of our community,†Jennifer Brinkman, the mayor’s chief of staff, wrote in an email response to questions.
Lancaster County Budget Director Dennis Meyer said the county avoided making cuts or delaying any big projects, though lodging tax revenues were down $1.8 million in 2019-20.
But because the pandemic slowed some services such as courts, the county was able to carry over $8.2 million from its previous budget to its 2021-22 budget. That made it possible to add $6.5 million to its cash reserve.
“At the end of our last budget — because our expenses dropped — we were sitting better than we ever have been,†Meyer said.
And today, city and county officials are in the process of distributing more than $100 million from the federal American Rescue Plan Act, which included $350 billion in aid to states and local governments.
As part of that process, federal officials asked state and local governments to estimate losses for 2020 by comparing their actual revenue to their expected revenue under a U.S. Treasury formula.
Cities reporting their revenues showed a total of more than $117 billion in losses, according to an Associated Press analysis of Treasury data.
Both Lincoln and Lancaster County opted to claim $10 million in losses based on a federal rule released in January that allowed governments to claim up to that amount without using the treasury formula.
Two of Lincoln’s biggest revenue losses were in an occupation tax on restaurant and bar food and beverages, hotel rooms and rental vehicles collected by a joint public agency to pay off Pinnacle Bank Arena debt; and city parking revenue used to maintain and improve city parking garages.
City officials said occupation tax revenue was nearly $2.5 million below projections in 2019-20, and slightly more than that in 2020-21. The city was still able to make arena debt payments, said City Budget Officer Sherry Wolf Drbal.
The city’s parking revenue was down $5.6 million in 2019-20 and $1.8 million in the last fiscal year.
Combined, those losses total $12.4 million over the past two fiscal years.
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City officials adjusted the budget to free up close to $6 million, which allowed for needed flexibility, Brinkman said.
Data provided by city officials shows several ways the city freed up money, including saving $660,000 by leaving eight positions unfilled for several months; delaying $50,000 in downtown streetscape improvements; putting $190,000 less into parks maintenance endowments and forgoing spending $1.4 million from one-time health insurance savings.
The city also used about $1 million in cash reserves to keep some programs operating and freed up about $1.7 million in the general fund by asking several departments to use unspent reserves. The city also saved $290,000 because of reduced StarTran operations.
Although city officials worried sales tax revenue would go down, it didn’t.
Sales tax revenue for 2019-20 was $80.3 million, $800,000 over projections. In the last fiscal year it came in $11 million over projections.
Wolf Drbal said federal stimulus payments played a role in that. While entertainment and service businesses suffered, people still spent money, especially on food, retail and home improvement products.
The influx of American Rescue Plan Act money — $46 million to the city, $62 million to the county — will allow both governments to tackle projects they wouldn't otherwise have been able to do, and to create programs to help the economy recover from the pandemic.
The city plans to make an announcement soon on additional awards through a $7 million grant program to bolster workforce development programs. It already has helped 164 small businesses with rent and mortgage assistance.
Much of $10.5 million set aside for public health programs — a combination of city and county funds — is being used for vaccination and booster clinics and other pandemic-related programs and technology upgrades, Brinkman said. Plans also include renovation or updates to buildings and the HazMat unit; and upgrades to help with household mitigation efforts and childhood safety programs.
The county plans to invest at least $10 million in expanding broadband access in rural areas, and will use $6 million to make up for losses in lodging tax and use for tourism-related grants, Meyer said.
Other county projects include buying body scanners for the Lancaster County Jail to reduce the amount of direct contact between employees and visitors and inmates; replacing the heating and air-conditioning system in the county’s youth services center and adding isolation rooms to the county’s crisis center.
It plans to contribute $4 million to efforts to build new wells to improve water quality in rural areas; contribute $1.5 million to the airport to help recruit more airline services; and has set aside more than $20 million for grants to bolster nonprofits that struggled during the pandemic, as well as other projects including improving youth crisis services; and earmarked about $10 million for community corrections programs.
The city is still deciding how to award tourism grants and what money may be used for community projects underway before the pandemic or other priorities, Brinkman said.
Meyer said the federal money will allow for many projects to move forward, and to help those affected by the pandemic, but won't help with regular operational costs, which are already being impacted by inflation.
He predicts that inflation will make for a tight budget year ahead, with increasing contract costs and cost-of-living adjustments. Already, money the county was able to add to the cash reserve is being used.
“Over this last year, because of inflation, it’s pushing us the other direction,†he said.