May is important month in determining Beachwood’s 2020 financial outlook - cleveland.com

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BEACHWOOD, Ohio -- City Council’s Finance Committee met via Zoom conference Monday (May 4) to take a look at the city’s economic situation in light of the coronavirus emergency. It appeared, after the meeting, that May could be a key month in predicting the city’s financial future.

Early on in the meeting, Mayor Martin Horwitz said: “I don’t want to sound very optimistic, but we are in better shape than many cities. But we still have to seriously approach this (financial future) because we don’t know what’s going to happen as businesses come back and as the mall (Beachwood Place) comes back. We just will not be able to do better predictions for probably another month.”

In the meantime, Horwitz said, some city workers have been furloughed in an effort to keep spending down.

Horwitz said that when deep concerns over the coronavirus began to take hold about five weeks ago, the city furloughed approximately 27 part-time workers, including school crossing guards, three officers that served as security at the currently closed City Hall, van drivers and more.

Horwitz, in another comment made early in the meeting, noted that there were probably many city employees watching the meeting live online. Speaking to those employees about future furloughs or layoffs, he said, “I want to make this extremely clear, that no decisions have been made, no directions have been taken, and all we have done so far is analyze where we could go when we have a better understanding of what we stand to lose this year.”

The city has about 150 union safety and service employees, and 50 to 60 administrative workers at City Hall.

Of what has so far been explored, Horwitz said, “We looked at reducing overtime; we looked at discontinuing part-time and seasonal employees; we looked at hiring freezes for non-essential employees; we looked at taking certain items off of our (list) of goals for this year; we looked at reducing spending in some cases, in some departments; we looked at not hiring in some departments; we looked at canceling a big chunk of our 2020 road (repair) program, and just maintaining some portion of it for asphalt work and emergencies; and we looked at the potential to cut items out of the 2020 capital expenditures, which would give us a sizable savings moving them to next year, or the year after.”

Horwitz said he has also looked at the possibility of taking from employees a percentage of their pay, or up to 80 hours worth of pay from non-union employees, which the city has, by law, the right to do.

The mayor has already decided to eliminate this summer’s youth recreation camps and, during the council meeting that followed the Finance Committee meeting, stated that he would likely have a decision as to whether the city’s pool would be closed within two to three weeks.

Finance Director Larry Heiser told council members that for April, the Regional Income Tax Agency’s (RITA) communities in Ohio were down in collections by 9.43 percent from a year ago. And all communities are facing the fact that they will get income tax revenue later than normal because the tax filing deadline has been pushed back from April 15 to July 15.

In Beachwood, Heiser said, the income tax decrease in April was 6 percent.

“When it comes to May, we’ll see,” Heiser said. “Things can change drastically. I don’t know the individual businesses, but I looked up enough of them, and they were still paying (their taxes). And if they stay here, we’re in good shape.”

Heiser added that Beachwood Place store H&M is, in fact, in the process of a large expansion at the mall.

Heiser said another concern is that businesses could ask for refunds on overpayment of net profit taxes, something that could cost Beachwood $1 million or more.

“We don’t have control over the income side,” said Councilman Alec Isaacson, “but we do have control over the expense side."

Isaacson noted that, in the budget Heiser and the mayor prepared, there were about $7 million in expense cuts already made, while the city is anticipating about $6 million less in revenues than originally projected.

"What other things should we be considering on the expense side?” Isaacson asked.

Heiser replied that 65 percent of the city’s expenses come in the form of paying employees.

“In order to effect any kind of change,” Heiser said, “it has to be people.”

Horwitz said that doctors are predicting that the fall and winter could well bring another large number of coronavirus cases. He said that, after the city makes cuts to things such as road repairs, the next step would be to look at wages.

“The only place we could really save after we’ve done a lot of these things (service cuts), is negotiating with unions for a wage freeze, (or) not negotiating until next year, asking them to hold their wages for the next year, because we should be starting to negotiate with them now (on a contract) for the next three years," he said.

Horwitz said an effort would next be made to reassign employees and “cut out staff from non-emergency services."

“My position is, I want to see more data,” Horwitz said. “I want to see more numbers. I think this month is going to be very confusing for people. People are going to start coming out and we have to see whether people are coming back to work, what’s happening with businesses, if they can survive with 50 percent of their occupancy. This is going to be a month that tells a lot of things.”

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