GPTC officials Jerome Parker (left) and Michael Washington

While City of Gary revenues fall on leaner times from COVID-19

Contributed By:The 411 News

Down the line of department heads appearing at back-to-back budget hearings before Gary's city council Finance Committee last week, all reported no changes in salary structures from 2020.

That was after Arlene Colvin, the Chief of Staff for Mayor Jerome Prince told council members that the city was expecting a $3 million revenue shortfall in the 2021 budget's General Fund.

Colvin said police and fire personnel salaries are the biggest part of that fund. "In order to accommodate cuts of that magnitude in our General Fund, we had to transfer some police and fire personnel to our public safety income tax fund." Colvin said the income tax fund had money left over.

Still remaining is $700,000 of the $3 million shortfall, Colvin said. "We think we can find that in funds not spent this year because of COVID-19."

Three million dollars might seem insignificant, but city finances face other pressures.

There's the big multi-million dollar a year debt repayment from the 2019 sale leaseback of the Gary Public Safety Facility. That deal gave the city $35 million in cash that then Mayor Karen Freeman-Wilson said would pay current debts and other financial obligations, and give the incoming Prince administration a balanced budget.

The transaction left a debt service cost of about $3.3 million a year and $66 million over 20 years. Repayment was scheduled to come from the city's share of Lake County's income tax fund.

But COVID-19 hit, closing some businesses and causing worker layoffs. The pandemic has shrunk income tax collections withheld from employees' wages and ultimately, could affect the city's ability to repay the loan in 2021.

In 2018 and 2019, Gary collected $4.5 million and $4.9 million respectively, as its shares of county income tax revenues.

Two city agencies that operate outside of city hall, Gary Public Transit Corp. and Gary/Chicago Airport, reported their budgets to the council.

Because of COVID-19, airport executive director Duane Hayden said the airport deferred maintenance projects, cut travel and training, delayed rate increases for tenants and delayed increasing costs for fuel.

"We expect a pivot point when United Parcel Service starts up at the end of the month. They are now training 74 employees," Hayden said. In May, UPS signed a long-term lease adding the Gary airport to its Next Day Delivery cargo network.

GPTC's 2021 budget will increase by 20% over its 2020 budget said finance director Michael Washington. "The $2 million increase came from federal, not city funds."

The pandemic hit GPTC extremely hard, Washington said. In April, ridership dropped to 26% of what it was in 2019. "But we are recovering."

GPTC General Manager Jerome Parker told the council the CARES Act was lifeblood for the corporation. "If that money wasn't there, I would hate to explain the things that we would have dealt with."

The transit company received $7.7 million from the CARES Act for operations and preventive maintenance. Buses were sanitized and sterilized every night. They were able to hire a service to clean buses on each return trip to the downtown Metro Center. "So our customers could see we were working to keep them safe," Parker said.

It allowed GPTC to purchase laptops so employees who could, worked from home.

"Our attendance has been outstanding. Unlike other transportation districts in my network, we didn't have absentee problems," Parker said. "We did conference calls since bus services don't operate on Sunday. It was an opportunity for employees to ask questions about finances, hear their concerns about safety, and they learned about our plans."

Transparency and thinking outside the box, Parker said, created an environment for trust and efficiency. Since February, only 2 GPTC employees have tested positive for the virus.

Gary’s city budget will be heard at the first city council meeting in October.

Story Posted:09/30/2020