Hattiesburg, Mississippi – On Monday, April 27, the City of Hattiesburg announced plans to move forward with a reduction in force process in response to projected shortfalls in sales tax revenues from COVID-19’s effect on the Hattiesburg economy. As of Friday, May 1, the city’s administration moved forward with a reduction in force that included 27 vacant positions and 39 filled positions.
“This is a tough day for our city. We take pride in working together and serving the citizens of Hattiesburg, and you become very close to fellow employees,” said Mayor Toby Barker. “We will do all we can to ease this transition for those workers who will be leaving us. I appreciate the effort and thought put into this process by our directors, who made some very difficult decisions over these past few days.”
Of the 39 filled positions:
- 22 positions were classified as full-time;
- 6 classified as part-time;
- 1 position included a salary reduction; and
- 10 of the 39 positions were full-time but were part of an opportunity to move employees to positions not dependent on the general fund or into essential public safety/code positions.
The total cost-savings from these measures for FY 2020 is $952,519 and $2,586,710 for FY 2021.A reduction in force provides for the city to be able to cover the sales tax shortfall for both March and April, and the savings for FY 2021 will significantly reduce the structural deficit in the General Fund. Dependent on the how quickly the local economy recovers from COVID-19, additional cost-cutting measures will likely be necessary.
“COVID-19 has brought trials and challenges to our community, and one pain point is its impact on our local economy. We know there is a growing shortfall in sales tax revenue, and difficult decisions must be made,” said Barker. “By making these moves now, we can make up ground for March and April. There are still hard choices ahead, but we pledge to continue to be transparent to our employees and the public about our financial challenges and the avenues with which we can navigate these uncertain times.”
Before deciding on a reduction in force, city administrators looked at two additional cost-saving measures. One option included a 15% reduction in salaries. The second option looked at reducing work schedules to 30 hours per week (excluding sworn public safety personnel). Both of these options will be considered again if further spending reductions are needed.
While each of these two options would generate substantial savings, they would only be short-term. Leaving the salaries at a reduced level past fiscal year 2020 would have a detrimental effect on long-term earning capacities for all employees and would also have an adverse effect on retirement benefits.
The city’s general fund is heavily dependent on the tax dollars generated from retail sales, and March numbers indicate a downturn (approximately 15%) for when the parts of the economy were shut down for less than half the month. That shortfall is anticipated to double for April and possibly May.
Barker added, “We will continue to study tax revenues as they come in, and we will make difficult decisions in order to bolster the city’s financial position for the remainder of FY 2020.”
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