Bloomington officials discuss potential budget shortfalls because of the virus

The Bloomington City Council learned Monday that it may face a 25% budget shortfall because of revenue loss caused by the COVID-19 virus.

The city, used to a robust revenue stream from its hotels and the shuttered Mall of America, is bracing for a potential budget hit of more than 18%. The city has already lost $4 million, and officials statewide say they have no clear sense of the financial damage the virus may do in coming months.

Bloomington's hospitality industry is a multibillion-dollar economic engine for Minnesota and is about 20% of the city of Bloomington's tax base. Tax revenue from Mall of America and the more than 9,000 hotel rooms in the city generate about 12% of the general fund revenue, which pays for essential services like police, fire and public works, said City Manager Jamie Verbrugge.

"In a normal year, we would now be focusing on our budget for 2021," said Budget Manager Kari Carlson. "This is far from a typical year."

Staff have been working on three economic scenarios for the city, ranging from a quick recovery to a long-term turnaround lasting through the year. The scenarios' revenue losses range from $8.5 million to $17.8 million. The city's general fund is around $80 million.

The city has some immediate options to help with about $5 million of the shortfall, including canceling a road pavement project, delaying capital projects and not filling vacancies. It might also have to dip into a reserve fund, she said.

Delinquent property tax payments from homeowners and businesses could also hurt. Even during the 2008 recession, Carlson said, nearly 100% of people paid their taxes.

Several council members called for long-term budget solutions, and Verbrugge assured them that eyes are already on the 2021 budget. He promised a preview at next week's council study meeting.

He also talked about possible federal financial aid. The only existing program is for virus expenses and for cities with a population over 550,000. While no Minnesota cities would be eligible, the Hennepin and Ramsey county boards could apply.

While many summer programs will be delayed or shut down this year, Verbrugge said Dawn Golf Course will open this week, but not Hyland Greens. Canoe racks and a community garden program will go forward.

"We anticipate the numbers of people who get the disease will continue to rise," said Assistant Public Health Administrator Dr. Nicholas Kelly. "We will get through this. I see Bloomington residents taking care of each other and themselves."

David Chanen • 612-673-4465