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'I don't know when this is going to end' | How much COVID-19 is hurting the Charlotte economy

City Manager Marcus Jones said Monday that there will be a budget shortfall worth millions of dollars due to a loss in sales tax and hospitality tax revenue.
Credit: Getty Images/iStockphoto

CHARLOTTE, N.C. — For the first time, we're getting a look at just how bad the coronavirus could impact the City of Charlotte's wallet, forcing a hiring freeze and city leaders to pinch their penny's as they try to move forward. 

"The last few weeks have been some of the most challenging I have ever seen and I don't know when this is going to end," said City Manager Marcus Jones before a virtual council meeting on Monday. 

He gave a presentation, showing the lasting impacts the virus could have as the city and nation are shut down for business. 

Due in majority to the fact that sales tax revenue is down 25-30% for the city, according to Jones, the city projects to have a shortfall of $13.7 million in total revenue. 

Jones said he projects the tax money that's brought in from our hospitality industry will drop by 85% by mid-summer, and likely won't return to normal until April 2021, depending on how long America is shutdown. 

"If this isn't a crisis, I don't know what is," said Councilman Ed Driggs.

"This is frightening data," added Councilman Tariq Bokhari.

Bokhari believes city leaders will have to be fiscally sharper than ever before in order to get out of the hole.

"The short-term stories that we've been hearing for the last couple weeks have been terrible, but we haven't even begun to see the long-term impacts that we're going to have to deal with here," he said. 

Some city leaders, including Councilman Matt Newton, have expressed interest in tapping into some of the city's $116 million that it has in reserves to help. 

The reserved money is in case everything halts. If that were to happen, then the city would have roughly enough money to pay it's operating costs for at least two months.

The city manager warned the council to have a plan in place for protection if they use some of the money. 

"If you're going to dip into those reserves, you don't dip into them without a plan to replenish them," said Jones. 

In response to the budget shortfall, Jones said the city will put a hiring freeze in place, with the exceptions of CMPD and Charlotte Fire Department, eliminating vacant positions. The city will also offer no enhancements to programs or create new programs in hopes of cutting costs, Jones said. 

The city will also constantly review expenditures, Jones added. 

Mayor Vi Lyles warned that city layoffs could be one option to cut costs, but said it was a policy discussion that needs to be had and she noted she was not saying she was in favor of it. 

"The way to replenish a reserve is to cut staff, that's where all your money is,” she said as she explained she's never seen a city rebound without cutting staff. 

Jones said he will present a budget to council on May 4.

City Council also passed two plans on how to help small businesses. 

First, Charlotte city leaders approved $1 million to grant program that will help microbusinesses, which are those with fewer than five workers. 

The microbusiness program will allow owners to apply for grants up to $10,000 in hopes it helps them during the in-between time as they apply for other state and federal loans, where they can. 

City leaders also approved spending $5.6 million in federal funding that Congress granted the city through the CARES Act, or the Coronavirus Aid, Relief, and Economic Security Act. 

Around $3.4 million will go towards Community Development Block Grants. Here is how it will be broken down and spent, according to the plan that was voted on: 

  • $1.2 million for Mortgage Relief
    • Will help serve 350 families
  • $1.1 million for Security Deposits
    • Will help serve 700 families
  • $1.1 million for Rent Relief
    • Will help 350 residents
  • $175,000 for utility assistance 
    • Will help serve 250 people

Charlotte City Council also voted to approve $1.7 million in an Emergency Solutions Grant funding that will create 120 extended-stay rooms for up to an eight-month period in our shelters. 

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