Baltimore does not need to dip into American Rescue Plan Act funding to balance the fiscal year 2021 budget, freeing up about $50 million for other projects, budget officials said at a City Council hearing Tuesday.
Budget Director Bob Cenname said that money from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Federal Emergency Management Agency allowed the city to close the budget with an $8.9 million surplus.
“We weathered the storm only because of our very generous federal aid packages and some luck on the transfer, recordation and income tax receipts,” he said. “But we’re certainly not out of the woods yet.”
When the fiscal year 2021 budget was first passed in June of last year, city officials did not know that FEMA would reimburse Baltimore for certain pandemic-related spending, nor was the American Rescue Plan Act conceived.
“So what happened was during the course of the year, the city aggressively spent on some COVID response with the expectation that we would have to come back at the end of the year and make adjustments for all of that spending,” Cenname said.
Now, the city has money to carry forward to this fiscal year’s budget. About $5 million in unspent agency appropriations from FY 2021 will go before the Board of Estimates to be put toward FY 2022.
The CARES Act awarded Baltimore about $100 million; $21.5 million went toward pandemic relief in FY 2020 and another $54.1 was spent in FY 2021. The remainder must be spent before the end of this year.
FEMA’s FY 2020 reimbursement for pandemic-related spending was just under $30 million. The city expects another $51 million from the federal agency, Cenname said.
“We have weathered the first wave of this COVID storm, which is the good news, but we still have a long way to go,” he said, pointing to a slew of income streams that he said likely will be affected for years to come.
Tourism related revenues, parking revenues, hotel tax admissions and tax convention center income all took significant hits as office workers continued with remote work and held off on business travel.
In fiscal year 2020, pre-COVID, Baltimore averaged about $3.4 million in hotel tax fees per month, equating to more than $30 million for a full year. FY2021 was a different story: the city averaged less than a million dollars in the same fees each month.
The city netted more money than anticipated in traffic violations: speed camera violations and red light violations brought in $7.8 million and $5.8 million. “In the early part of COVID, even though there were less people on the roads, there were a lot more people breaking the law,” Cenname said.
The violations have gone down somewhat as traffic has resumed “what we would call more normal patterns,” he added.
Parking fees saw the starkest drop, with a nearly $50 million difference from pre-COVID to the end of the fiscal year. The fees will likely never return to pre-pandemic levels given the now-ubiquity of remote work, Cenname said.
“Nobody wants to buy a parking garage in this environment,” he said.
But income tax and asset taxes helped the city offset those losses, he said. Baltimore had its strongest year in transfer and recordation tax fees in 14 years, collecting $96.8 million. “The last time we approached that level was back in fiscal 2007,” Cenname said.
