Alpharetta projects largest losses for city budget will come next year

The town green at Alpharetta City Center is flanked by two restaurants in jewel box buildings, Botiwalla (left) and Charinga (right). Photo credit: Morris & Fellows.
The town green at Alpharetta City Center is flanked by two restaurants in jewel box buildings, Botiwalla (left) and Charinga (right). Photo credit: Morris & Fellows.

Alpharetta city officials say the financial impact of the coronavirus pandemic on its economy will hit the hardest in the coming fiscal year. This year’s budget should finish in the black, but the 2020-21 fiscal year could end with a projected deficit of $3.4 million if steps aren’t taken.

Alpharetta’s Finance Director Thomas Harris told councilmembers that despite the emergency shutdown of businesses and restaurants around the city of 67,000 people in north Fulton County, the city is likely to finish the fiscal year on June 30 with a surplus. The real pain could arrive next year.

Harris said before the virus hit, he had anticipated more than $2.5 million in revenue surplus for the current fiscal year. He has revised that estimate downward, now predicting a smaller surplus of about $184,000 by the time the fiscal year ends. But for the following 2020-21 fiscal year, Harris’s early take shows a projected deficit of nearly $3.4 million.

Harris suggested that the next fiscal year’s deficit could be significantly reduced with discretionary adjustments. Among the potential moves the city could consider to save money, he suggested freezing staff raises, stopping business travel and freezing hiring except for public safety and 911 operator positions.

“[Harris] is trying to anticipate what the overall economy may do countywide,” James Drinkard, assistant city administrator, told The Atlanta Journal-Constitution on Tuesday. “At this point it’s very hard to predict what recovery from COVID looks like and how long it’s going to take; how many businesses across Fulton County may never open their doors again.”

Harris reviewed the impact of the coronavirus pandemic on the city’s budget during a Monday Alpharetta City Council workshop held by video conference. The loss of tax income and other fees is a blow to the city’s budget, Harris said.

For the upcoming fiscal year of 2020-21, the city estimates it will lose the most money in hotel/motel taxes — a $919,000 loss is projected, equal to a 27% drop from original projections before coronavirus. The second largest loser will be in parks and recreation event fees, where an estimated $525,500 will be lost, equal to a 20% drop from original projections.

The city’s Local Option Sales Tax had been on track to collect $17.1 million this fiscal year, but that will be reduced by about $500,000, Harris estimates. The LOST money goes into the general fund to be spent on police, fire and other services paid for out of the city’s general fund.

For now, neither cities nor citizens can know how long the economy will be hobbled.

Alpharetta Economic Development manager, Matthew Thomas thinks the city will need to confront a new normal when office workers return. Alpharetta currently has 25 million square feet of office space, but he thinks a substantial number of corporate employees might continue working remotely even after the crisis is past. “That could potentially lead to companies executing smaller leases in the future,” Thomas said.

Alpharetta has 25 million square feet of office space. Before the public health crisis shuttered offices, so many workers came into the city on each workday that it doubled its population. Businesses have been paying 62 percent of the city’s property taxes.

“Alpharetta has become a boom town over the past six to eight years, primarily on the back of the redevelopment of our mixed-use commercial real estate and the hospitality to support that,” said Mayor Jim Gilvin. “This is a gut punch. This virus and everything that’s going on. It’s completely changing the field of how businesses large and small are going to adapt to that.”