COVID-19 crisis impacts public budgets

GVH sees biggest initial hit. Revenue decreases a major concern.

By Mark Reaman, Katherine Nettles and Kendra Walker

Dealing with a rare pandemic is not cheap for anyone, especially local government institutions with limited resources. It is estimated that the COVID-19 outbreak has cost local government agencies and districts hundreds of thousands of dollars thus far. The next financial issue will be the expected decrease in sales tax revenue, estimated to be well over $1 million for the north end of the valley alone no matter when restrictions are lifted.

Here is an early look at where some of your public dollars have been spent so far in the COVID-19 pandemic.

Gunnison Valley Health

As might be expected, Gunnison Valley Health is taking a big hit as a result of the coronavirus crisis. Between lost revenue and additional expenses, the hospital is dealing with a deficit of about $1.5 million per month. That is expected to continue until the crisis is resolved. According to GVH CEO Rob Santilli, GVH has had an incremental cost of about $250,000 on additional equipment, supplies and testing related to COVID-19 and this figure is expected to rise. For example, GVH purchased additional ventilators to use for patients admitted with COVID-19 issues. As for lost revenue, the hospital is not allowing non-essential medical procedures such as surgeries, imaging and lab testing.

“We have also tightened our expenses to ensure that only necessary expenses apply,” added GVH chief financial officer Mark VanderVeer. “We do have a COVID-19 Support Fund for those who can contribute to help with COVID-19 equipment and testing.”

Santilli said it’s not just about the money. “It is almost impossible to summarize in financial terms the amount of resources that have been redeployed to address COVID–19. As much as we may have added another quarter million dollars in supplies and equipment, we have operating room nurses supplementing the senior care center, physical therapists acting as supportive caregivers and our facilities team converting rooms to negative pressure,” he summarized. “Overall, our entire health system has been reconfigured to address this pandemic.”

Gunnison County

The total response cost logged for Gunnison County through April 12 is $256,908, according to Gunnison County finance director Linda Nienhueser. “We have a database where all employees are entering their COVID-19 activities, total hours and supply/equipment costs,” she said.

These costs being logged are outside of normal county business. $7,234 of that has gone to supplies/equipment, and the balance is payroll costs for all county employees spending time on COVID-19 response. Nienhueser explained that the employee spending is “Not just overtime, as we don’t know what exactly might be reimbursable, and we want to track total cost to report to the Incident Command Team and the public.

County manager Matthew Birnie predicted last week that the figure might climb as high as $2.6 million over an 18-month period, based on projections from Nienhueser. The $2.6M estimate includes relief funds as well as some use of reserves to cover lost revenue. “As grants, federal funding and more data on other revenue collections becomes available, we can better estimate the effect on County reserves,” says Nienhueser.

Crested Butte

The town of Crested Butte is less worried about hard costs coming in as a result of the coronavirus response and more concerned about losing sales tax revenue that powers the town budget. Town finance director Rob Zillioux said initial costs have been minimal. ”Thankfully, the town has not incurred large out-of-pocket expenses for the COVID-19 response,” he explained. “As of this week, we have spent roughly $5,000. These expenses are mainly for technology—Zoom, laptops, iPads—extra cleaning supplies and newspaper ads.”

That is not to say town staff isn’t dealing with the pandemic situation. Zillioux said staff members have obviously spent hundreds of hours, if not more, dealing with the crisis. “For example, as deputy finance lead for the county Incident Command Team, I spend at least two hours every day on calls, and additional time preparing for those,” Zillioux said. “I am also spending hours and hours on FEMA and other relief efforts. Town manager Dara MacDonald has obviously spent even more time than I have. Kat Carpenter, Jessie Earley and others have volunteered many hours volunteering for relief and support.”

But it is the unknown of how much revenue will be lost by the town that is the primary concern. Crested Butte depends on sales tax for a large part of its budget and if tourists are not visiting and spending money, sales tax revenue takes a big hit. “My forecast has us 25 percent to 50 percent below budgeted sales tax [revenue],” Zillioux predicted. “Should travel restrictions and social distancing restrictions be lifted by June, then I think we will be closer to 25 percent lower than budget. However, if travel restrictions are still in place this summer, we will be 50 percent or greater below budget.”

Zillioux said so far in 2020, revenue from property taxes are on budget and the real estate transfer tax revenue is slightly ahead of budget, as there were several very large sales during the first quarter of the year. The short-term rental excise tax revenue is non-existent while vacation rentals are disallowed. Thus, the affordable housing fund does not have much in terms of revenue and the town’s ability to launch new housing projects will be greatly limited.

Mt. Crested Butte

The Mt. Crested Butte Town Council discussed economic impacts during its April 7 meeting.

“The big challenge for us is we don’t know when we are going to open, and that makes trying to predict what summer revenues are going to be extremely difficult,” said Mt. Crested Butte town manager Joe Fitzpatrick. Staff estimates April and May sales tax revenues at 0 percent of budget, with June revenues predicted at 20 percent.

Items initially pulled out of the town’s budget include the community plan; administration travel and education; town picnic; park pavilion work; road maintenance; and 50 percent of park landscaping. The town also has $5,000 in savings due to not having an April election. These cuts total approximately $320,000, said Fitzpatrick.

Other cuts under consideration include the July Fourth fireworks and the noxious weed program, which would save approximately $19,000 and $15,000, respectively. However, Fitzpatrick does not recommend cutting the weed program.

While staff has spent hours analyzing estimates on revenue losses and expenditure cuts, “We have not calculated a payroll cost to COVID-19,” said town finance director Karl Trujillo. Nor has staff calculated what the virus has cost town so far.

The majority of expenses related to COVID-19 have been in payroll and related self-quarantine situations, said Fitzpatrick, and minimal COVID-19 supplies have been purchased. “At some point we will have to pull the numbers together but right now we are just logging the numbers on payroll sheets,” said Fitzpatrick.

The town’s position with sales tax deferment remains on a case-by-case basis, and can waive interest and penalties if needed. “We’ve had very few calls, just a couple of people, and we’re working one-on-one with anybody who has a challenge,” said Fitzpatrick.

The only business currently open in Mt. Crested Butte is Treasury Liquors & The Store.

Crested Butte EMS

The Crested Butte Fire Protection District has set aside $100,000 from its budget for a major incident specifically related to the management of the coronavirus outbreak. But according to EMS and fire chief Rob Weisbaum they have only spent about $6,000 so far.

“This doesn’t take into account the volunteer hours which are being tracked on a county level which could be eligible for federal funding reimbursement,” he explained. “The police have also been providing a paid officer at our test sites twice a week for the last month. We have been fortunate enough to not have to spend large sums of money to manage this and have been heavily reliant on our normal staffing and the additional help of our volunteer team to provide coverage for an expected surge.

School District

Gunnison Watershed School District made technology purchases for internet access for families and staff, including 100 cell service hotspots at an initial cost of $3,999. The ongoing cost for the hotspots is $3,359 per month ($39.99 per unit for 84 units activated so far), said district superintendent Leslie Nichols. Fortunately, the district already had enough Chromebooks, laptops and iPads to cover needs.

The district is losing approximately $110,000 in school breakfast and lunch sales revenue, but is saving money on typical food purchases and is being federally reimbursed for the Grab & Go sack meals service. However, the district is not being reimbursed for payroll costs associated with the food service operations.

Money is being saved on utilities, trash removal and transportation costs, but staff is still using the buildings on a limited basis. Nichols said they are also losing revenues in the following areas; spring athletics and activity fees, preschool tuition and interest.

Nichols says the biggest impact is yet to come. “Our revenue for the 2020-2021 school year is completely unknown at this time…While we will make it through this year and will make payroll to honor our contracts with our employees and the work they are doing, and to contribute to our local economy, we just don’t know what next year or the next many years hold for preK-12 education…All of that said, Gunnison Watershed remains fully committed to teaching the beautiful children of the Gunnison Valley.”