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Grass Valley, Nevada City first to feel COVID-19 economic hit

John Orona
Staff Writer

CONTINUING COVERAGE

This week The Union presents “Investigating the Impact,” a series of stories that will discuss how Nevada County is coping with the COVID-19 crisis. This week’s coverage will focus on the economic toll of the pandemic on business, government services and nonprofits.

For most, the economic blow caused by the coronavirus pandemic has been felt almost immediately, with businesses effectively shut down overnight and unemployment claims breaking historic records.

For Nevada County government operations, thanks to lessons learned from the last recession, the significant economic hit felt by most of the world hasn’t notably impacted their activity, at least not yet. While the county has shut down some services and pooled some of its 800-person workforce who cannot work from home into a disaster worker pool, most of the changes made so far have been cosmetic.

According to county Financial Officer Martin Polt, while some departments have been immediately impacted, for the most part the county’s budget concerns continue to be rising pension costs and property tax revenue, as they have been historically. Pension and employment costs lead the county’s expenses, with pension costs projected to rise between $1-$2 million each year, breaking $30 million by the 2024-25 fiscal year.

Following the Great Recession, the county’s share of property tax revenue, the largest source of general fund dollars, fell to its lowest point at just under $34 million in the 2011-12 fiscal year. Since then it’s grown to more than $46 million, but Polt warned as efforts to curb the spread of COVID-19 continue, the “new normal” could have lasting effects on business and property tax values that could damage the city’s most buoyant source of funding.

“Property tax is absolutely very important to the general fund,” Polt said. “We’re definitely concerned about that.”

The county averages a positive property tax growth rate of more than 5%, but during the last recession rates dropped more than 7%. While county officials don’t expect such a precipitous drop this time around, any negative consequences on property taxes will be felt by the county in the subsequent years.

Coming out of the housing crash, the county focused on tightening its budget by reducing its total staffing through attrition, county Human Resources Director Steve Rose said. In 2001-02, the county had 1,054 full-time equivalent employees and steadily brought the figure down to 986 employees in 2007-08 before dropping rapidly to 773 in 2012-13.

Today the county has 801 employees, with 30 vacant positions. County officials said the ethos of keeping cost drivers down and creating reserve balances continues to be an integral part of their budgeting process, putting them in a position to navigate the economic crisis strategically.

“We’re trying to be thoughtful about how we approach this,” Polt said. “Because we are in good financial shape, we don’t want to be reactionary.”

Reduced revenue

In the shorter term, taxes that rely on economic activity, such as sales tax, transient occupancy tax and gas tax, will be affected the most. Preliminary estimates project those revenues could be reduced by around 30%, depending on how long economic activity is slowed, officials said.

Projections from the start of the fiscal year estimated sales tax for the year would reach $4 million. About $4 million was allocated from the gas tax to road maintenance projects.

According to Board of Supervisors Chairwoman Heidi Hall, how the county opens as restrictions ease will also play a role in its economic forecast. County officials have convened a reopening task force to guide the process of ushering in the new economic normal, which could look drastically different to how most businesses are accustomed to making money.

After relaxing some restrictions on recreation this week, county officials said they will work on a larger recreation plan for the summer to allow more businesses to open safely down the road.

According to Sierra Business Council Vice President Kristen York, while some businesses will continue to hurt as patrons shy away from large gatherings, other businesses could benefit from people looking for rural recreation in the next phase of the economic recovery.

The cities of Grass Valley and Nevada City are facing more dire financial straits, though like the county many impacts are yet to be felt or even projected.

This month Grass Valley substantially amended its budget to account for a nearly $1 million loss in projected revenue over the next two fiscal years, laid off four positions, froze seven others and proclaimed a financial emergency. The frozen positions include a maintenance worker, city clerk, mechanic, police officer and three firefighters. An assistant engineer, general ledger accountant, senior accountant and senior administrative clerk were laid off.

The loss in revenue is largely due to sales tax losses, which are the biggest funding drivers for both cities’ general funds. Grass Valley could lose nearly $500,000 in sales tax revenue alone next year.

According to Nevada City Manager Catrina Olson, the city will receive an updated budget reflecting the extent of the economic damage during its next meeting and will convene the budgeting process to implement changes for the upcoming year the next day. While the details are being compiled by the city’s consultant, Olson said the projections are much worse than initially anticipated and could call for a slow, multi-year recovery.

Nevada City Mayor Reinette Senum said the city is prepared to make more changes, but with the small-scale operation of the city it’s unclear how much more they could cut if necessary.

MORE IN THE SERIES

Regional housing trust fund in the works for Nevada County

Nevada County looks to emphasize smaller units

No fears of housing density among planning officials

COVID-19 protocols strain Nevada County homeless shelter’s budget

Tenants, landlords arrange payment options during COVID-19 eviction ban

Patchwork of tenant protections intact for now

The high cost of homelessness in Nevada County

Nevada City collaborates with county and nonprofits to move campers off Sugarloaf Mountain

Nevada County housing market sees increased demand, limited inventory

‘I may have now but I might not tomorrow’: No uptick in Nevada County homelessness amid COVID-19, but future concerns linger

Nevada County graduates consider options in wake of COVID-19

Nevada County students receive more than $800,000 in scholarships

Graduating seniors in Nevada county weigh financial, academic concerns for college

Career education program adapts to meet needs of students

‘I just want to play’: Players, coaches, ADs and officials eye safe, speedy return of high school sports

‘Should I jump into a career?’ Many questions remain for students, teachers and administrators as the future draws nearer

Nevada County middle schoolers, high school underclassmen unsure what to expect next year

Support systems for Nevada County teens go virtual during pandemic

Sierra College summer enrollment not slowing

‘The best they could’: Nevada County Superintendent of Schools reflects on the school year, ponders what’s to come this fall

‘I can’t see the bottom now’: Administrators consider where and whether to make layoffs amid revenue shortage

‘These kids want to ball’: Youth sports organizations grapple with tough decisions regarding COVID-19 safety

Hamstrung: Nevada County summer sports scene hit hard by COVID-19 pandemic

Nevada County theaters go dark for the year

Movie theaters struggle to cover rent, utilities in an industry that typically operates with narrow profit margin

‘Planning for all of it’: Nevada City Film Festival moves online for this year’s event

Nevada County’s music festivals look to virtual events to build community, recoup finances

For Nevada County musicians, the show goes online

Nevada County artists adapt, host online galleries, concerts and workshops

Street fair cancellations in Nevada City, Grass Valley a huge economic hit

‘We are the recovery; we are essential’: Nevada County Arts Council survey reveals artists, art organizations are struggling

Who’s zooming whom? Creativity among Nevada County artists in the pandemic era

Nevada County Arts Council receives $112K Tahoe Truckee Excellence in Education grant for new project

Nevada County nonprofit funding in jeopardy

Nonprofits struggle to serve clients during pandemic shutdown

Nevada County animal rescue groups see surge in fosters, adoptions

Nevada County’s thrift stores move ahead with reopening

Possible postponement, cancellation of Nevada County Fair would negatively impact several Nevada County nonprofits

Local nonprofits feeling the effect of canceled, postponed fundraising events due to COVID-19

Feeding Nevada County: Effort to help those hungry bolstered by partnerships between nonprofits (VIDEO)

Nevada County youth organizations adjust to public health requirements

Volunteer work faces changes at Nevada County nonprofits amid restrictions

‘Do you have reserves?’ Still much uncertainty over how nonprofits will fare in coming months, years

Government business continues in isolation during COVID-19 pandemic

Nevada County, cities collaborate to reopen safely

Wildfire prep in Nevada County continues virtually during pandemic

‘This is why we signed up’: Librarian, homeless shelter manager continue working during pandemic

Financial aid offers much-needed relief in western Nevada County for those who can get it

Grass Valley trims staff in response to COVID-19 shutdown

Nevada County: Staffing, service reductions not yet needed

Nevada County property tax on par despite pandemic

Nevada County health workers say they currently have sufficient supply of personal protective equipment

Hospice of the Foothills continues providing end-of-life care during COVID-19 crisis

Senior care facilities on lockdown during COVID-19 pandemic

Residents of Nevada County senior living communities staying connected

‘Continue to plan and prepare’: Hospital analyzes finances, anticipates federal funding to ensure financial stability

Nurses in Nevada County and the region talk about why they love their jobs

Nevada County not planning to release more detailed COVID-19 case data

Officials: Testing is key in calls to reopen in Nevada County, across California

Nevada County doctors change approach to providing care due to COVID-19

The trifecta: Public health experts recommend testing, contact tracing and supported isolation to phase into a reopened world

Investigating the impact: Lack of revenue, uncertain return date causes concern for arts and entertainment venues

Impacts of Idaho-Maryland mine to be revealed soon

Nevada County artists discuss how COVID-19 shutdown has affected them

‘The arts are essential’: Center for the Arts launches emergency relief fund

Real estate sales strong in Nevada County despite challenges

No slowdown seen in Nevada County construction industry despite COVID-19 lockdown

Nevada County government, home improvement and real estate representatives talk business during COVID-19

‘I’d like to place an order’: In light of COVID-19, the demand for home delivery services in Nevada County is at an all-time high

Grass Valley, Nevada City first to feel COVID-19 economic hit

See you soon? Small business owners struggle, but are hopeful for a brighter tomorrow in Nevada County

Nevada County businesses struggle navigating economic relief

Nevada County health care providers pivot on financial tight rope

‘A sudden and dramatic downturn’: Nevada County economy will be hurt for longtime following coronavirus slowdown, expert says

‘A recession, let alone a depression’: Western Nevada County businesses apply for federal loans, but most have yet to receive money

Nevada County businesses, governments, nonprofits navigate uncertain times, worry what’s ahead

RELATED RESOURCES

http://www.TheUnion.com/coronavirus

http://www.MyNevadaCounty.com/coronavirus

Coronavirus Guidance for Businesses/Employers

Nevada County Relief Fund for Covid-19

To contact Staff Writer John Orona, email jorona@theunion.com or call 530-477-4229.


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