The city of Durango furloughed staff members earlier this year in the face of the coronavirus pandemic – a move that officials said was needed and achieved its desired effect. But the city has no plans to use the same cost-saving strategy in 2021.
In March and April, city management expected to lose up to 30% in sales tax revenue because of the pandemic’s economic impacts. It delayed or scaled back $6 million in projects in April and cut expenses wherever possible. That included furloughing 178 full-time employees one day each week.
“It was absolutely critical and necessary,” Devon Schmidt, acting finance director, said Friday. “We had to implement those (furloughs) quickly with the uncertainties of the economic impact.”
The partial furloughs, which lasted from May 8 to the end of July, saved the city about $470,000. Most of those savings were in the general fund, the fund hit hardest by reduced sales tax revenues.
The 2020 budget was already tight, and payroll makes up 42% of the city’s operating budget, Schmidt said.
“That was not a recommendation that city management took lightly,” she said. “City employees are our biggest assets.”
Impacts and innovationsOnce the finance department started seeing improving financial forecasts mid-summer, the city relaxed the furloughs, Schmidt said. Durango is still maintaining its other cost-saving initiatives, like deferring its capital projects and reducing expenses.
During the furlough period, hourly employees could work only 32 hours each week, and salaried employees could work 40 hours maximum.
“Losing those additional hours certainly made it challenging to get everything done in a day that we needed to,” Schmidt said. “We still made providing quality services to our citizens a priority.”
They started looking for ways to be more efficient. For example, the finance department started using electronic invoice payment forms instead of paper forms. Even just using different software tools saved Schmidt three to four hours on assembling financial reports.
“We certainly looked at prioritization and what is absolutely critical,” Schmidt said.
In the Community Development Department, everything is funded by the sales-tax dependent general fund except the sustainability and parking programs, said Kevin Hall, the department’s director and assistant city manager.
“What I saw happening is folks filling that void on the weekends, when that’s supposed to be family time, quite frankly,” Hall said. “I think they held up OK.”
Staff members quickly had to adapt its systems, particularly for planning, engineering and development review. People were no longer meeting in person, so services were conducted digitally.
“And fortunately, for the past year, we had been working toward that anyways,” Hall said. “There is a silver lining in that we ended up having to move toward fully digital services much sooner than we may have otherwise, and it has proved to be effective.”
Hall identified a few other innovations that could remain even in the absence of the pandemic.
The opportunity to join remote trainings saved the city money while helping its employees continue earning certifications, he said. The Main Avenue bump-outs, which give businesses extra square footage on the street, never would have happened if it wasn’t for the economic hardships caused by the virus, he said.
“What happened this year shows we can be successful in doing (bump-outs),” Hall said. “I’m really excited about what that might bring for the future.”
Looking aheadThe city is still monitoring economic trends heading into 2021, and Schmidt expects revenues to decrease by 8% to 10% compared with 2020, she said.
Although each department is directed to cut expenses where it can, the city does not plan to furlough employees in 2021. Management is trying to figure out other ways to save on costs as the city recovers.
“With all of the cost-saving measures we did put in place ... we should be heading into 2021 in a sustainable and balanced way,” Schmidt said.
Hall said the city still has several months to go this year before knowing the final fiscal situation heading into 2021.
“There are lot of (budget) iterations that are going to occur before we know how effective we can be going into 2021,” Hall said. “It is safe to say we are taking a very conservative approach.”