As COVID-19 threatens revenue, Overland Park furloughs 200 workers, freezes pay raises
Anticipating a significant loss of revenue as the community remains shut down during the coronavirus outbreak, Overland Park has moved to furlough 200 part-time staff members and postpone pay raises for all city employees.
Now, some City Council members, plus the Overland Park Fraternal Order of Police, are calling on the city to reverse course and dip into reserves to support its employees.
City spokesman Sean Reilly confirmed that part-time employees at both of Overland Park’s community centers will be furloughed, beginning Sunday. The 200 workers — which include front desk attendants, life guards and class instructors — will be paid through Saturday, although many have not been working since the centers closed on March 15.
In addition, budgeted pay raises for the city’s more than 1,400 employees have been postponed for the next 60 days. The pay raises — which were scheduled for first responders, administrators, public works staff and others — varied depending on jobs and performance, but averaged about 3% this year, Reilly said.
“We’re expecting a significant hit to the current 2020 budget. What that will be exactly, we’re still trying to calculate,” Reilly said. “Our primary source of revenue is sales tax. So we have Oak Park Mall that closed, as well as many stores and restaurants across the city. That impacts our revenue stream. So we’re taking efforts to reduce expenditures at this time.”
Mike Mosher, president of the fraternal order of police, said the pay freeze affects more than 225 officers who are working during the coronavirus outbreak, and who were planning to receive raises of 2% to 3.25% on March 29.
“This also affects the amazing men and women of our public works, fire department and other essential city services,” Mosher said in a statement to The Star. “Our members don’t have the ability to always practice social distancing. … Although we take precautions to protect ourselves, we do not have the ability to work from home. Our members are literally on the front lines of this fight.”
Mosher is calling on the city to dip into its reserves to increase pay for first responders.
“The public is watching, future employees are watching, we encourage the city to reverse its decision to withhold pay from our members during this time,” he said.
Overland Park City Councilman Faris Farassati criticized the city for the actions, saying management acted too quickly to furlough part-time employees and freeze raises without first studying the long-term toll on the budget.
“With first responders, their job is hazardous enough. Now they could walk into a sea of coronavirus wherever they go, and we freeze their pay raises?” Farassati said. “Let’s not add to their anxiety. Let’s not add to how difficult their job is by taking away their raise they might have planned on.”
Overland Park budget threatened
Reilly said the city is also considering postponing or canceling several projects scheduled for the next few years, including road and infrastructure repairs.
“I guarantee we’re turning over every rock, trying to prevent layoffs,” he said.
City Manager Bill Ebel already warned the City Council earlier this year that declining sales tax revenue meant the city would likely remove some projects from its five-year plan.
Across Johnson County, cities have been faced with dropping sales tax revenue, as well as the looming “dark-store theory” of commercial property valuation, which is snaking its way through Kansas courts. Retailers argue their assessed value should be based on an empty store, not the additional value of the business that could be generated. If they prevail, it could lead to a loss of up to 30% of property tax revenue, county officials have estimated.
Now, an economic downturn caused by the spread of COVID-19 is threatening city budgets even further. Overland Park, Reilly said, is being proactive to avoid the same sort of layoffs and other cuts the city made during the 2008 recession.
Between 2008 and 2011, the city spent down about two-thirds of its general fund reserves. The city is now maintaining a reserve fund of more than $50 million, according to the budget, with the goal of having reserves that are at least 30% of annual expenditures.
But Councilmen Scott Hamblin and Farassati are questioning how the city is choosing to cut expenditures, arguing the city is putting the burden on its most vulnerable employees.
“We are two weeks inside this pandemic and we are furloughing people immediately without understanding the economic impact,” Farassati said. “Without looking at alternative ways to save money, we put pressure on our most fragile employees, those who are part time.”
Reilly said the city is working to provide different jobs for the furloughed employees, such as seasonal work at parks or the arboretum.
And, he hopes that the postponed pay increases will make their way to employee paychecks in a couple of months. But Reilly said the city is first waiting to see how revenue is affected in the coming weeks.
“This is an evolving economic situation,” Reilly said. “The unemployment claims for Kansas grew over 1,000% in one week. And Overland Park is no different. We’re expecting a significant hit to our finances. Just like the person at home, we’re being financially responsible.”
But Farassati and Hamblin said they aren’t convinced.
“We couldn’t swallow this decision,” Farassati said. “How much harm would it cause to allocate a couple million out of our reserve funds and pull through this within the next five or six months? We are one of the richest cities in the metro and we are furloughing people? I just don’t understand.”
This story was originally published March 31, 2020 at 3:07 PM.
