Plano city leaders brace for revenue losses, possible hiring freeze due to coronavirus pandemic

PLANO, TX – A report at Monday’s city council meeting outlining Plano’s three-year financial forecast came with three words in bold red letters across the top: “Very challenging times.”

The council was advised that while Plano will be on solid footing through September, the city will need to brace for the long-term impact of the COVID-19 pandemic. Next year, the city may have to put a contingency budget in place, which could involve freezing positions and limiting costs, Plano budget director Karen Rhodes-Whitley said.

The virus sweeping across North Texas and the nation has caused many businesses to temporarily close and lay off workers. Residents are being asked to stay home as much as possible to help stop the spread of COVID-19.

“The pandemic is likely going to affect every revenue source that we have,” Rhodes-Whitley said at the meeting.

Plano’s projections show a possible 50% decrease in hotel and motel taxes partly because of hotel closures and travel restrictions brought on by the pandemic. Sales tax revenue could decrease by at least 10%, Rhodes-Whitley said, explaining that the projections could worsen as the virus’s impact expands throughout the business community.

Fees for building and development, courts and recreation will also be affected. Assessed property values are a “lagging indicator” and usually take a year to show up, Rhodes-Whitley said, and there is talk they will not be updated for 2020 because many properties aren’t being appraised under the stay-home order. If that happens, it could result in a $5 million revenue loss for next year, Rhodes-Whitley said.

The tax rate of 44.82 cents per $100 of assessed valuation was maintained throughout the forecast. According to the projection for the 2021 to 2022 tax year, Plano would need to increase its debt rate by 60 cents to 11.70 cents. This would require $2.9 million to come out of the general fund to fund debt.

Despite the projections, city officials cautioned that the impact of the pandemic is still unknown.