Flagstaff City Council discussed and approved the city manager's Economic Recession Plan as the city continues to battle the COVID-19 pandemic and the effects it brings to the city's health and economy.
Flagstaff City Manager Greg Clifton said it is important for the city to have a plan in place to provide financial guidance.
"Taking measures to be prepared for economic downturns is critical to how well the city financially responds to a reduction in resources to provide ongoing services to the community," Clifton said. "It is imperative to have these strategic measures in place, proactively, in order to plan and prepare for such downturns well in advance."
Clifton said the proposed plan takes into account the possible variety of economic uncertainties and identify potential corrective actions when revenues or reserves are jeopardized. This comes at a time when the city's economy is heavily dependent on discretionary spending of visitors and discretionary purchasing surrounding tourism, real estate and construction markets.
In addition, Clifton noted the plan is based upon an incremental application of five remedial action steps in a progressive fashion as the current pandemic illustrates the need for an adaptive economic plan. Step one in the recession plan was to see expenditures reduced wherever reasonably possible and step two will see the possibility of non-essential services end, according to the Economic Recession Plan.
"The first stage is relatively minor, while the fifth and final stage presupposes a crisis situation," Clifton said. "The intervening stages become progressively more impacting, as declining revenues worsen and is intended to be proactively applied, utilizing economic forecasts and indicators as enumerated."
During Tuesday night's meeting, Clifton said this plan can be implemented at the administrative level during the early stages of a recession or economic downturn with council action required for more stringent measures. Currently, the administrative level has implemented the early stages of the Economic Recession Plan as the city instituted a partial hiring freeze and furloughed 167 city employees, as of last week.
Clifton said the city's budget team comprised of members from management services, city manager's office, human resources, Economic Vitality and the Employee Advisory Committee. The team served as the working body to evaluate economic indicators and recommended remedial economic measures.
"Our budget team has held onto this Economic Recession Plan for some time now and we still see this as a draft plan," Clifton said. "I say that this is a draft plan because I would love to have council's approval and adoption of this plan as it is formulated to stand the test of time."
The plan utilizes a sliding scale approach to both its implementation and suspension to the fluidity of the changing economic landscape caused by the COVID-19 pandemic. Clifton said the current pandemic — with its rapid spread, uncertain severity and unknown duration — illustrates the need for this adaptive approach.
Moreover, Clifton said if the conditions leading to the implementation of the Economic Recession Plan are likely to continue for multiple years, the cumulative effect of the reduction in revenues or reserves should be considered in determining the appropriate phased response.
Vice Mayor Adam Shimoni voiced approval, along with the other council members, for the city manager's Economic Recession Plan, as council unanimously approved the Economic Recession Plan.
"The days ahead will be challenging, that is for sure and I like the ideas and the principles that the city manager outlined," Shimoni said. "I am glad to hear that we are only in stage two currently, unlike other cities in our county."