PHX Reporter

The Phoenix City government is anticipating major economic challenges in the midst of the COVID-19 outbreak. 

According to KJZZ, the city manager, Ed Zuercher, said that large-scale cuts need to be made to the budget. 

In response to the state of the budget, Zuercher believes that the financial standing will need to be monitored periodically moving forward. 

“That means we’ll be assessing and adjusting monthly or even more often throughout 2020 and 2021,” Zuercher said.

Recently, the city had a surplus in their budget of $28 million, but the outbreak and spread of COVID-19 has resulted in a deficit of that same budget.

The deficit can be blamed on a number of areas that have seen little to no movement since the virus began to spread. Retail sales and tourism and entertainment have previously been relied on for a good portion of the city’s revenue — roughly 30% — and it is likely that there will be a larger impact felt from sales taxes due to businesses that have had to close. 

Deputy city manager, Jeff Barton, will be asking city department heads to begin drafting new budgets that add in cuts of 25% — which is considerably higher than the Great Recession’s 6% to 12% cuts. 

Along with his request to department heads, Barton gave a number of scenarios which each varied in their budget deficits — from $26 million to $128 million — which are each dependent on how long the economic slowdown lasts. 

Barton has recommended against the city depleting or using any of the $55.4 million contingency fund at this time. 

Council members have inquired about using their portion from the $2.2 trillion Coronavirus, Aid, Relief and Economic Security stimulus package, which is likely to be $1.3 billion split from the state’s share, but Barton acknowledges that there is not a simple fix to this complicated issue. 

Zuercher said that the council members are currently working on approving a flexible budget, with a start date of July 1.