“Perhaps 50% of Solvang businesses will close indefinitely and residents may face months of unemployment and career uncertainty!”
Council Saves $3.5 million but still needs more to cut from 2020 & 2021 Budgets!
Op-Ed: By Council Member Chris Djernaes
The views and opinions expressed herein are strictly my own. I do not speak for the Council or City Management. All information is derived from City and public sources.
California’s State-mandated response to the C19 crisis has led to a near-total collapse of Solvang’s nearly $250 million/year economy, 50% of which is derived from tourism. Sadly, Solvang’s government, businesses, and residents have received very little Federal, State, or County relief funds. And the worst of the economic damage is yet to come.
.Sadly, the State’s mandated global closure has arguably cost Solvang $40+ million/month, and even if the City were to re-open by May 1, it will take 9-12 months to return to pre-crisis levels, as a best-case scenario. Given this wishful thinking, the cumulative economic recovery and losses for Solvang are shown below:
Assuming the recovery rate to 66% of normal by June 2021, the City as a whole could see total losses of approximately $172 million. However, this naively assumes the Southern California region recovers fully and tourists return en masse to pre-crisis spending patterns. And if you believe this, I have a famous bridge in San Francisco to sell you.
If you’re not despondent yet, ask yourself how likely is it that: 1) a vaccine is found by September 2020, 2) a more lethal strain doesn’t return in winter 2020-21, and 3) the State doesn’t foolishly shut down the economy again as recommended by its unelected, Mandarin officials. Let’s be clear, the psychological and economic disasters and resulting social upheaval will only worsen the longer the arbitrary State and County mandates remain in place.
Facing the threat of looming bankruptcy, the Council cut annualized operating expenses 35%, delayed critical infrastructure repairs and focused limited reserve funds entirely on preserving essential services. To date, Council has cut approximately $3.5 million in annual budget expenses as summarized below:
Given that the Community must come first, the City has been reduced personnel from 39 to a skeletal 20 employees in 9 months. It has been a painful but necessary adjustment, especially in light of the unprecedented business closures and residential job losses. If the shutdown continues, the City government itself could become technically insolvent by June 2021. A victim of the State’s radical response.
Operating without any Federal and State bailout aid, the Council is committed to prioritizing the health, safety, and welfare of the Community and to cost-effectively deliver essential services. Perhaps 50% of Solvang businesses will close indefinitely and residents may face months of unemployment and career uncertainty. The City government will have to do more with a budget that is now 30-40% smaller until there is full recovery. How we work together and what we do as a community to rebuild our City will define us for the next 20 years. There is no margin for error.
The Council’s stated policy is to “Do More with Less,” improve quality of life, focus on essential services, maintain critical infrastructure, accelerate urban renewal, and grow the City’s tax revenues by diversifying into sustainable, eco-friendly internet industries. Mirroring Copenhagen’s successful partnerships between government, businesses, residents, and academia, this is the essence of Solvang Smart City 2.0.
The Council has a proven plan to help the City recover and be stronger than ever. Rest assured that it is doing everything it can to help the Community survive and recover from this historic, unprecedented economic shock.