Northfield officials believe budget reserves will be needed to combat a potential revenue loss of more than $1 million through next year as the city continues to face the fallout from the coronavirus pandemic.

Statistics relating to the economic impact of COVID-19 were presented Tuesday during a Northfield City Council meeting.

Finance Director Brenda Angelstad said last year generated an increase of general fund reserves above targeted levels, which could be allocated to address any shortfalls. She said the reserves within the city’s enterprise funds, which include water, wastewater and the liquor store, are at a “healthy” level.

Northfield City Councilor David DeLong said the possible revenue reduction is “a semi-educated guess,” because no one is sure how long the pandemic will last.

“We are planning for the worst but hoping for the best,” he said.

Angelstad said the city is taking steps to mitigate potential losses, scrutinizing expenditures and differentiating essential versus discretionary spending for 2021.

She said the biggest risks to the city are likely to be potential delinquent property taxes, sensitivity to local property tax increases as residents struggle financially, and state local government aid cuts. Northfield LGA funds are budgeted at $3.2 million — 23% of the general fund.

DeLong spoke against state cuts to LGA funding made a decade ago by then-Gov. Tim Pawlenty during the Great Recession. He said Gov. Tim Walz has learned that a lot of cities rely on LGA funding to keep taxes low.

City operated businesses are feeling the pinch

The DMV in Northfield was closed for three weeks last month per Walz’s stay-at-home order. It’s estimated to have lost $12,000 during that time. The center partially reopened the week of April 20 with limited service.

Northfield Liquor Store sales were up 5.7% in March but decreased nearly 20% in April. Northfield is seeing lower customer counts in the store, but higher sales per purchase. Angelstad said the liquor store has sufficient reserves to cover any revenue losses.

Officials have implemented a two-week COVID leave for staff and are following federal guidance on additional COVID-related sick care and child care leave policies.

Those considerations, however, leave a potential increase in overtime and information technology to facilitate remote work during a difficult financial time. There is also an increased facility cost to allow for physical distancing and increased sanitation.

Thirteen Northfield city employees have already used COVID-related leaves, whether for self-care, taking care of someone else in their household or caring for children while school is in distance learning mode.

Although it is too early for the city to estimate an amount Federal Emergency Management Agency will allocate, city officials expect to be able to submit certain expenses for reimbursement.

Reach Associate Editor Sam Wilmes at 507-645-1115. © Copyright 2020 APG Media of Southern Minnesota. All rights reserved.

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