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City of La Crosse prepares for 'major' recession; furloughs and layoffs possible

City of La Crosse prepares for 'major' recession; furloughs and layoffs possible

From the The pandemic hits home: Keep up with the latest La Crosse area news on COVID-19 series

The city of La Crosse is preparing to battle an unprecedented recession in the wake of the COVID-19 pandemic, approving a preliminary task force and plan for the coming months and years.

The “Economic Recession Plan” that the Finance and Personnel Committee approved on Thursday night outlines five stages of a recession, and officials said the city is on the brink of the fourth stage, or a “major recession.”

“We’re losing a lot of sleep over our situation,” said Valerie Fenske, the city’s director of finance and human resources.

The city’s finance department is currently forecasting a revenue shortfall of about $5.9 million toward the city’s general fund, which is a deficit of 8.65% in revenue for 2020.

Much of the revenue loss is coming from the La Crosse Center, which has cancelled several major events in the past two months, and other tax-based revenue, but other loses will come from citations, license renewals and various other fees the city collects from its residents.

Officials are also preparing for a 7% reduction in state-shared revenues in 2020, with an even higher reduction expected for 2021 while the state balances its budget.

Mayor Tim Kabat

Kabat

“I wouldn’t count on any federal or state help coming our way,” La Crosse Mayor Tim Kabat said at the meeting Thursday evening, noting that major lobbying happened for the second federal stimulus bill to directly benefit local municipalities, with no luck.

“I think we should plan for the worst and hope for the best,” he said.

Part of the plan includes creation of an internal “executive budget team” — that does not include any council members — who will meet with each city department to assess finances, and act accordingly.

The group plans to have proposals of action to the common council by the end of this month.

A total of 75.5% of the city’s $57.9 million budget is dedicated to staffing and personnel, leaving many city officials worried about furloughs and layoffs for employees.

“We are going to look at options to do everything we can to not have to resort to layoffs, especially, and furloughs,” Kabat said.

Officials said they would be looking closely at options they could take to prevent these changes, including the possibility of reverting to a 37.5-hour work week.

The finance department also said it would be looking at the impact of removing certain personnel from essential services during the pandemic, such as police and fire staff, and that if any cuts were made, it would “not be across the board.”

“There’s a lot of nervous staff, and the last thing I want to do is make them more nervous,” he said. “I think right now, we’re going to rely on the creativity of our department.”

Kabat noted how difficult removing any of its employees would be, especially given the important purpose they’ve served to the community during the pandemic.

“If anything, I think it shows just how critical local services are,” he said.

Overall, officials showed a sense of urgency to get the plan in place, noting that other cities across the state — such as Madison, which is projected to lose 8.9% of its revenue, or $30 million — have already taken the steps.

“Time is of the essence,” Kabat said, “and we need to really be very quick and thorough as we go through ideas and options for how we’re going to plug this deficit.”

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