Centennial city funds may absorb COVID-19 impact without major cuts

City employees may avoid furloughs seen in other metro-area municipalities

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As hundreds of city government employees around the Denver metro area face temporary layoffs spurred by sales-tax revenue shortfalls amid the coronavirus pandemic, Centennial may emerge without having to furlough staff or make large service cuts.

City staff members were still assessing budget shortfalls, but as of April 27, Centennial had not made any furloughs or layoffs, and city spokeswoman Allison Wittern didn't believe any are planned.

Centennial prides itself on contracting with outside entities — both public and private — for services, such as public infrastructure and law enforcement. Police services in the city, for example, are provided by the Arapahoe County Sheriff's Office.

That “contract model” of government and the city's budgeting and investment practices have allowed city council to avoid making major service cuts, and to absorb projected revenue shortfalls, Matt Sturgeon, city manager, said in a statement.

Centennial has put in place a hiring freeze, made other operational adjustments and will defer several large infrastructure projects until the economic impacts of COVID-19 are better understood, Sturgeon said.

“But our city leaders' — past and present — commitment to conservative spending practices placed the city in a manageable financial position at this time,” Sturgeon said.

At 19 years old, Centennial has long stuck to a strategy of avoiding debt, but it already faced potential shortfalls in the years ahead, even before COVID-19 upended cities' sales tax revenue.

The city has “far more capital needs than resources to fund them,” and much of its infrastructure has been in place for more than 25 years, according to the 2019 city budget.

Centennial's capital funds are spent on infrastructure for transportation and safety, along with maintenance of city facilities like the Centennial Civic Center.

The city has projected a need of about $106 million in anticipated projects from 2019 to 2028, Wittern has said. The gap in funding could be $20 million to $30 million in the long range, Allison said in early 2019.

One of the biggest contributors to that gap is the city's model of not debt-financing its infrastructure.

The overall fund balance — money the city will have saved up after its spending in 2020 — was estimated at about $81 million, according to details of Centennial's 2020 budget. It was unclear how COVID-19 will affect the city's savings.

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