I-Team: Breaking down the budget of every valley city

The coronavirus pandemic has financially impacted nearly everyone. including city governments.

From police to firefighters, to libraries, museums, parks, landscaping and so much more the pandemic is taking a financial toll on services throughout the Coachella Valley.

The Coachella Valley, which relies heavily on tourism, has been hit especially hard.

Palm Springs is facing a big loss. The city's main source of revenue is tourism, with roughly half of its $121-million budget generated through 'hotel bed' and 'sales tax revenue.' But with the shutdowns and tourism at a virtual standstill, the city is now facing a potential loss of about $78-million over the next 14 months.

"This is like a tsunami of an economic stop," said Palm Springs City Manager David Ready.

The city faces some tough cuts in the future.

"With the coronavirus, in essence, taking all this revenue out of our budget, the city council is going to be forced to re-focus on what our priorities are. So core services have to remain, but there's a whole range of things that we're going to have to look at in a different light," Ready said. "So like for example, right now in the last two months, we've saved about $10-million in a whole range of non-personnel cuts, savings, positions that we just haven't filled and all kinds of non-personnel operational savings."

Next is Cathedral City, which has a budget of about $114-million. City officials project a loss of about $7 million to $10 million dollars in annual revenue due to the pandemic.

In response, the city has frozen any new hirings except in the dispatch center. Travel and non-essential spending has been eliminated and the city will soon be reviewing other cuts to its budget.

Looking at Desert Hot Springs. City officials project a loss of more than a million dollars in general-fund revenues for this year's budget and a loss of roughly $780,000 for next year.

In response, the city has frozen six vacant positions, cancelled all travel, and put one-time expenses and projects on hold.

In Rancho Mirage, city officials estimate a shortfall between $4 million to $6 million dollars through June. The city's current operating budget is about $27-million.

City officials say they plan to cover the losses using several reserves the city has accumulated over the years, which total about $72-million. Right now, Rancho Mirage's core services, including public safety, will not be impacted but the city says it is still reviewing all non-essential expenditures.

Taking a look at Palm Desert. The city is projecting a loss of about $11-million from its $60-million budget, as many of its retail stores remain closed.

Palm Desert city manager Lauri Aylaian says it's impossible for the city to carry on business the same way it did before the pandemic.

"It's going to impact us a in a lot of ways. It's already impacted the way we do business. We're maintaining our services in a different manner than we've provided them in the past, we're more digitally based, we're operating remotely but it's also going to impact the face we have in the community. We'll see re-imagined special events, we won't be having the same large gatherings that we've had in the past for things like concerts in the park, we'll be addressing our businesses differently," Aylaian said. "We took $2-million that had been incentives to encourage businesses to come to palm desert and to build new developments, this is going to be used to help our existing businesses survive and help them get by. We're going to be changing the way that we police. The services we provide from the fire department as far as the fire marshal goes. It's going to change us in just about every way imaginable."

Aylaian says the city will lose a number of police officers, who will be replaced by community safety officers who do many of the same services but do not carry a gun.

In Indian Wells, the city is looking at about $11-million in lost revenue from its $49-million budget through the end of June This includes about $3 million in lost tax-revenue from this year's cancellation of BNP Paribas tennis tournament.

To make up for the losses, the city says it plans to use surplus-revenues of nearly $3-million, postpone capital projects, delay its planned donation of a million dollars to Eisenhower Health, and reduce operating costs.

In La Quinta, the city is facing a roughly $7-million loss to its $59-million budget driven by hotel closures and a reduction in vacation rentals.

La Quinta finance director Karla Romero some of the things the city is going to put on the backburner.

"At this point, what we've determined we'll postpone are some capital improvement projects such as our corporate yard, we might have reduced landscaping throughout the city, the wellness center operations may not be what they used to be, based on the impacts of COVID-19, museum, library operations may also have reduced capabilities. We are certainly evaluating the ability to use city hall and other facilities for the public," Romero said. "We're currently reviewing the law enforcement services, and trying to find out if there's any possible reductions without affecting service levels."

Taking a look at Indio, where the Coachella and Stagecoach music festivals were postponed, the city is projecting a loss of about $12-million to its $78-million budget.

City officials say they plan to address the shortfall by deferring capital projects, curbing some operational expenses, postponing the filling of some vacant positions, and utilizing its reserves.

Finally, the city of Coachella, which has a budget of about $24-million. City officials say they expect a loss of more than a million dollars in sales tax through the end of the year which will be covered by general-fund reserves.
Further losses continue to be accounted for.

Of course, all these numbers could change depending on how long this pandemic lasts. But one thing is certain, even after everything reopens, every city in the Coachella Valley will be financially impacted.