City of Carlsbad projects $94M in revenue for new fiscal year

COVID-19, a drop-in crude oil prices and a reduction in gross receipts taxes (GRT) prompted the City of Carlsbad to pass a conservative 2020-2021 fiscal year budget, according Wendy Austin, deputy city administrator.

Tuesday night the Carlsbad City Council approved 8-0 a spending budget of $106 million for the 2020-2021 fiscal year, which started July 1. The budget contains $94 million in projected revenue — an $11 million deficit for the fiscal year. Austin said the deficit would be balanced with money held in reserve.

The projected revenue is a 27 percent reduction from the prior year revenue of $129.8 million.

“And is primarily related to a reduction in GRT revenue budget,” she said.

Austin said labor costs were down 1 percent from the prior year at $50 million, and operation costs are down 37 percent from the prior years.

She said the city budget $23 million for project spending in the current fiscal year.

“Projects not considered critical are being placed on hold until certain revenue trends are recognized, and further confidence is gained from the local economy,” she said.

Ward 1 City Councilor Edward T. Rodriguez said councilors had a tough time crafting this year’s budget.

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“Everyone understands the downturn in the economy means we have to take a step back,” he said.

Austin said Carlsbad Mayor Dale Janway and other councilors were acting fiscally responsible.

“Although revenues are projected to be down this fiscal year, there has been great consideration taken by our elected leaders to pay down debt and establish reserves for these types of uncertain times,” she said.

The financial picture for Eddy County government appears to be strong this fiscal year, despite falling oil prices and COVID-19 said Finance Director Roberta Smith.

Smith said the county boasted $60 million in cash reserves.

“That is enough to currently cover our general fund for the whole fiscal year,” she said.

Smith said the county was always prudent when crafting spending plans.

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She said expenditures for the 2020-2021 fiscal year were budgeted at $123 million and the total revenue was projected at $93.9 million.

“We did have a balanced general fund this year of $59.8 million, meaning we budgeted just as much in revenue as we did in expense, so we’re not planning on using on cash reserves this fiscal year,” Smith said.

She said Eddy County ended the 2019-2020 fiscal year with a $12.4 million surplus.

Since oil prices fell earlier this year, Smith said the amount of money collected from oil and gas taxes fell since April.

“For the 2019-2020 fiscal year we were collecting almost $3 million a month for oil and gas. We did take a hit in June, of course that was the end of the fiscal year and we were already over budget, so it didn’t affect us,” she said.

The 2020-2021 fiscal year started July 1. Smith said the county collected over $600,000 in oil and gas revenue from business activity conducted in April.

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“Because for oil and gas and GRT we’re always two months behind in collection, so when we’re receiving that distribution, it’s from that business activity conducted two months ago,” she said.

Mike Smith can be reached at 575-628-5546 or by email at MSmith@currentargus.com or @ArgusMichae on Twitter.