After a disruptive year, which involved the unexpected financial shock of the pandemic and the resulting shut- downs, the city has ended up in better financial shape than was expected.
Cottonwood City Council and city administration are set to begin working on the Fiscal Year 2021-2022 budget in February, beginning the multi-month process of determining the city’s spending priorities for the coming year.
“Things are currently going along as normal,” Cottonwood Finance Director Kirsten Lennon said. “We had a small decline in that March to April time frame when we were shut down — when we shut down the restaurants and businesses — but since then it’s come back. Currently our sales tax as of November is 9% higher than it was last year at the same time period. Even though the pandemic is happening, people are still in this area working, and shopping, and eating, and going to the restaurants — still doing things.”
According to Lennon, Cottonwood’s big box stores — Wal-Mart and Home Depot — were a big part of keeping sales tax revenues up, as people from throughout the area continued to come to Cottonwood to shop.
In the spring, the city’s expectation was precisely the opposite. In May, the city government laid off four full-time employees and one part-time in an attempt to deal with a $400,000 hole in the budget. The city also canceled nearly all of its capital projects.
But according to Lennon, the drop in city services is part of what has allowed the city to be in good shape as it nears a year since the start of the crisis. For instance, while the Cottonwood Recreation Center has seen its revenues fall sharply since the beginning of the pandemic, this has also meant less city spending on programs at the CRC, balancing things out slightly.
“We reduced some expenditures there,” Lennon said. “As part of the pandemic we eliminated some positions in different departments to help with the budget. We decreased classes, so we don’t have to pay those instructors. They’re doing stuff online. We’re not doing the programming so we don’t have to buy all the equipment or do all the T-shirts for PR, or do all the things. Those things cost money, too. No revenue but those expenditures are gone now.”
In addition to healthy sales tax revenues and lower expenditures, the city benefitted heavily from COVID- related grants from the federal government. The largest was $1.4 million from the CARES Act passed in March, which paid for much of the city’s public safety budget for police and fire personnel. Additionally, the city received a $4,000 grant for the library to purchase wire- less devices for use during the pandemic, and a $10,000 grant for personal protective equipment such as hand sanitizer and masks.
All of these factors have led to Cottonwood heading into what is hopefully the last leg of the pandemic with a far better financial outlook than expected and the potential to engage in large projects that had been put off. At a special meeting on Jan. 12, the city council instructed staff to move forward on the potential purchase of the “Rough Cut” building at the intersection of N. Main St. and N. 10th St. for a new city hall, a project that could potentially cost $8.1 million in total over the course of several years.
“Before the pandemic and all that happened, things were looking good. We were planning on doing some more projects, some capital items,” Lennon said. “Then the pandemic happened and we totally shifted our perspective and reduced our budget.
“Right now with where our budget is, we’ll be doing pretty well by the end of the year. “We’ll be able to do some things that we wanted to do.”
