The city of Gainesville has been hit not only by the coronavirus pandemic, but also by the downturn of the oil and gas industry.
“Overall we could have as much as an $800,000 loss,” City Manager Barry Sullivan said this week. “We’re looking at two different money crunches here. We are looking at one from the oil industry and we’re looking at one from COVID.” COVID-19 is the disease caused by the coronavirus.
“I’d give it about 50/50,” Sullivan said of the estimated loss breakdown while adding that sales tax is “really impacted by the oil industry.”
He said the city’s pandemic-related losses look to be around $315,000 so far, with the zoo and municipal court taking the biggest hit.
Declines in the city’s sales tax allocations, he said, will probably be related to both the coronavirus and the collapse of the oil and gas industry this year.
Sullivan said one of the city’s biggest losses has been from the municipal court because of fewer traffic citations being written.
“We’re looking to lose about $120,000 from municipal fines because of the time,” Sullivan said.
Municipal Judge Chris Cypert said police “kind of stopped running traffic” because of the uncertainty of the coronavirus.
“There’s no reason to put police in jeopardy,” Cypert said.
In March 2019, there were 547 cases filed in his court. This March, there were 283.
Gov. Greg Abbott declared the coronavirus a statewide public health disaster on March 13.
In April 2019, 559 cases were filed with the court, Cypert said. This April, 203 cases were filed.
“It’s quite a hit,” Cypert said, while adding that people who are jobless due to the coronavirus are going to have a hard time paying fines.
He said he plans to assign lots of community service hours because people can’t pay, so anyone who needs community service workers should reach out to the court.
“This is May, and my numbers are low now,” Cypert said.
As of Wednesday, May 20, 180 cases had been filed with the court this month, Cypert said. In May 2019, 435 cases were filed with the court for the whole month.
“I would think that these numbers will stay low for just a little bit,” Cypert said.
Frank Buck Zoo
Frank Buck Zoo Director Susan Kleven told the Register earlier this month that the zoo at 1000 W. California St. could have “1,500 to 2,000” people on a typical May morning from school groups. However, that wasn’t the case this month, she said.
Cooke County schools have been closed since spring break following orders from Gov. Greg Abbott.
Kleven said school groups make up a “huge” part of the zoo’s budget.
“Seventy-five percent of our annual operating budget is offset by March through June,” she said. “It’s gonna be not good.”
Sullivan said the Frank Buck Zoo has lost about $160,000 with around $135,000 of it being from lost admissions and the rest of the loss from educational events.
Sullivan said he estimates that the city could lose up to $489,000 in sales tax, but even so it could come within budget. He said the city budgeted for a decrease because of the projected future of the oil and gas industry.
For the current fiscal year, the city budgeted $5.76 million in sales tax revenues. The city’s fiscal year begins Oct. 1.
“We could bring in $78,000 less than we budgeted per a month for the rest of the year and still hit budget,” Sullivan said. “Because we were above budget on everything until this last month.”
But so far, everything is just speculation. Sullivan said he doesn’t know what the future holds. The oil and gas industry is down and that’s not “just because of COVID,” he said.
Sullivan said the city was hearing there could be negative oil “months before” it happened.
On Monday, April 20, the cost of crude oil closed out the day at negative $37.63 per barrel — ending in negative territory for the first time ever, reports show, meaning producers were effectively paying buyers to take oil off their hands.
“We expected it down anyway for like 18 months when it went down,” Sullivan said.
Now, it’s hard to say when the industry might see favorable trends again.
Usage, Sullivan said, is a factor and right now there just isn’t much demand with people telecommuting and traveling less because of the coronavirus.
Mining, quarrying and oil and gas extraction is the most concentrated industry sector in Gainesville relative to the national average, according to a 2018 economic overview report provided on the Gainesville Economic Development Corp.’s website, with about 6% of the city’s labor force employed in the field.
Sales tax allocations from the month of April aren’t in yet, but Sullivan does believe those numbers will be lower, reflecting not only the oil and gas industry as it had been but also the shutdown of businesses due to the mandatory orders of Abbott.
The city, Sullivan said, will be seeing the trickle effects of the coronavirus and the oil industry for quite some time.
Sullivan said the city is applying for pandemic-related grants to help with expenses incurred related to the coronavirus. However, the grants do not cover losses.
“This is the longest ongoing emergency that we have ever had,” Sullivan said while giving kudos to the countywide response team. “That’s what makes this a little different.”
What’s beneficial for the city, Sullivan said, is that he tries to take a conservative outlook on things.
While referencing the 2007 and 2015 floods, Sullivan said it takes years to recover from disasters. Reimbursements from government agencies aren’t instantaneous, so he knows to be sure to have reserves available, he said.
“We’re used to having disasters hit and have to have cash to carry us through,” Sullivan said while adding it can take seven years to get final disaster payments. “We’re used to steep drops in the oil industry. We have determined that we need larger reserves than other cities that aren’t in the same situation.”
He said the city is keeping the taxpayer in mind as the 2021 budget season kicks off.
“We’re going to try to remain as efficient as possible and continue to be conservative with what we’re figuring so we can assure we can be here to provide the needed services to the public,” Sullivan said. “ …We just don’t know where this is going.”