Brent Ballard:
Okay, good afternoon everyone. Welcome to this Calfee webinar, featuring the mayor of Cleveland. I'm Brent Ballard, managing partner the Calfee Law Firm, privileged today to introduce our featured guest, the honorable Frank G. Jackson. Before this friendly audience he hardly needs an introduction, in his fourth term, mayor Jackson is set to become the longest serving mayor in Cleveland history.
Brent Ballard:
He's led our city through daunting challenges like transforming schools and city neighborhoods. Today he's at it again, leading us through the unprecedented pandemic of our time. On Monday afternoon he laid out his plan for restarting Cleveland. And now I'd like to introduce Rich [Rasic 00:00:47] and Mike Bowen. Two members of Calfee's government relations group, who will lead today's discussion with the mayor on COVID-19 and the city of Cleveland's plan for the future. Gentlemen.
Michael Bowen:
Thanks Brent. And mayor thanks for joining us. We're going to get right into it here. So as you can imagine, everyone is nervous about the virus continuing to spread. What measures has Cleveland public health taken and put in place to prevent the spread of the virus so far?
Mayor Frank Jackson:
Well, so far we're doing contact tracing, we're working particularly with those hotspots, in areas where there's concentration and density of people, nursing homes, or long-term care facilities, where you have people who are most at risk. We do public service announcements, all types of communication, we're on TV we're on radio, we doing that. So we try to keep people informed, but we've entered into a new era of this thing, particularly in terms of the gradual reopening of our economy.
Mayor Frank Jackson:
And with that we're taking another approach, which is doubling down on what we're currently doing, but also adding more of education, prevention and intervention strategy and redirecting resources and personnel into that.
Ray Tarasuck:
Mayor, I think that goes into next question we had really well. I mean, education is a big part of your restart Cleveland program, especially around the health issue. So can you talk a little bit more about that, about the education going forward from a health perspective?
Mayor Frank Jackson:
Well, first of all we want to be efficient and effective about what we do, so there's already a lot of data out there in terms of hotspots. Of course we don't provide specifics in terms of actual buildings or homes or people. But in general we know the hotspot, we know the mapping of it, and we know the at risk people.
Mayor Frank Jackson:
And so if you look at density as one thing, chronic illness underlining chronic illness and age, those three factors are major factors. So as we collect data on that, that helps to inform us in terms of what our strategy is, where our efforts are.
Mayor Frank Jackson:
So if we have places where there's high infections, again such as congregate living, then we work with our medical institutions and the medical directors there to concentrate effort there, particularly to stop that spread in those confined areas, and get proper. So now we're into education mode and a prevention mode. And what we're doing is we have essential and non-essential employees, and we are identifying those non-essential employees who are at home, still getting paid and performing some duties, but not much.
Mayor Frank Jackson:
And so we're now training them over the next couple of weeks to be outreach workers to go into these dense areas where we have density, and into residential areas we're targeting seniors to provide that prevention education and helping them to be able to take appropriate steps if in fact they believe that they have a problem or someone in their family.
Mayor Frank Jackson:
So it's really and doing the contact tracing. So we're adding, we're deploying people into those efforts and resources. Those efforts that are not costing us any more money, because we already are paying people to do work, is just that this is the new work that they'll be doing.
Michael Bowen:
So mayor you test on community outreach and we know that that's a part of the plan and it's a big part of the plan. What kind of training are these employees that you've moved over to community outreach receiving, and as they go out essentially how do they know what they're doing?
Mayor Frank Jackson:
Well, Friday we'll be doing training the trainers. The trainers training the trainees or whatever it is when you train people to then train other people. And we're consulting with expert who has some experience in pandemics in the military, to help us in terms of what that training should look like. What the elements of that training should be.
Mayor Frank Jackson:
And then starting next week, the people who have been trained to train other people will begin to train the employees that we're deploying into that area. And then they will go out, and now almost like a trial run later in the week to perform. And then next week they'll come back to me and tell me how that's working and whether or not we need to tweak it. And that's basically how we doing.
Mayor Frank Jackson:
The details of what the message is in terms of training, I leave that up to the experts, and they'll be doing that. How they interact with people, there would be sensitivity, how you deal with seniors. And what we want to do is many of our employees have relationships in certain parts of our community, and those who have those relationships we would attempt to deploy them there, where they have some familiarity with the people there, the people have familiarity with them.
Mayor Frank Jackson:
They won't work eight hours a day, five days a week. They will be rotated in and out, so that we can really kind of manage it and not burn people out, particularly those people who this is not what they do, this not been what they do.
Ray Tarasuck:
So mayor, in addition to the education and the outreach and monitoring part of your program that you announced, it also calls for a number of programs to mitigate some of the short term economic impact that businesses have had and individuals have had. And I think there's three main programs that your plan calls for. Discuss a little bit each one of those programs for us please.
Mayor Frank Jackson:
Let me first start out by, I know this is, we label it our plan for recovery. But as you could tell, just looking at the dollar amount, that's not going to get it. And as you also know that government can take leadership and things or set directions and policy, but the real determiner, whether or not in this case the economy is brought up and whether or not we are moving in the right direction for recovery in the future. Is really will be based on the private sector.
Mayor Frank Jackson:
So what we're doing is attempting to address the immediacy of people in businesses who have been affected as a result of the virus. So that means our immediate action is really to deal with that. The growth actions that we'll have to take will have to be in partnership with the private sector and how the private sector behave. So I just want to put it in that context, that this is not just as $30 million or this $10 million is not going to solve the problem. But what it will do is help to mitigate the suffering and the burden of small businesses and people.
Mayor Frank Jackson:
And we plan to do that by looking at low interest loan of $10,000 to help cover some expenses of small business like rent and utilities and things like that for a 90 day period or so. And have it retracted back to March and then have no payment on that to January next year.
Mayor Frank Jackson:
We're also looking at businesses that are 30 or 35 employees or more, and providing them with $100,000 of low interest loan, almost like a line of credit, something that gives them a cash flow. And we will have some forgivable aspects of these things dependent on whether or not they retain or go back to pre virus employment level.
Mayor Frank Jackson:
On smaller businesses, less than 30, I think it is, that's 25,000. And then we're looking at the special, what we call special needs kind of businesses that had been immediately in pay that were very specific when they were told to close, like barbershop, beautician shops, restaurants, some storefronts that are affected.
Mayor Frank Jackson:
And so with looking at them we were saying, we will provide some assistance to them, and what we are looking for from them I think is $20,000 of assistance. And they can have up to 50% of that $20,000 forgiven if they too get back to their prior employment level, so that we can help them to not just get in business to employ. And also helping them on what they will have to do physically and structurally with their operation, just to be able to open back up, which would mean they will need some... I will give you example of that, hair salons, barbershops are required to have certain kind of ventilation, because they use certain products, they have chemicals and things in it. That could be quite a bit of money, some thousands of dollars.
Mayor Frank Jackson:
So what we would do is say that we would, if it's going towards that cost, we would help you with that. Maybe that turns into a grant, right?
Mayor Frank Jackson:
Now, the interesting thing about this, in terms of these smaller businesses that we've identified, and even those larger ones that we identified in the other category, is that they've had zero or minimum revenue stream. And they've reduced their costs to the point where they couldn't reduce it anymore, but they still had to cover and carry some costs, right? Just to say that they're still in business.
Mayor Frank Jackson:
Now, they're being asked to ramp up at full cost, plus an additional demand based on social distancing, or some special equipment that they need, right? But at the same time their customer base and the volume of customers will not return. So in that sense, it's almost why would you even reopen? Why would you do it? Because you're going to lose money, is going to cost you more to reopen and you're guaranteed to have less revenue because of the restrictions around social distancing and special equipment that you have to have.
Mayor Frank Jackson:
So we're trying to help them through that period of time to help them. But again, this is not a recovery for Cleveland's economy as a whole, this is a recovery for those types of business that I mentioned. And also setting the stage as we stabilize small medium-sized business. If we begin to help stabilize them, get them back into profit making mode, that we also look at our large business and our corporate spending and institutional spending to be investing back into our local economy.
Mayor Frank Jackson:
Example, the city of Cleveland, even if we laid off half the people of the city of Cleveland, we still have to stay open, which means we're going to spend money. The question is who do we contract with to procure those goods and services that we need? I'm saying that if we are sincere about rebuilding our economy, then we should invest whatever we have to spend to stay in business into our local economy, which supports small, medium sized business, support employment activity, supports a consumer market that we believe will go much further than if we're contracting goods and services outside of our economic footprint.
Michael Bowen:
Mayor, along those lines, as businesses need help and assistance, so do individuals. So can you talk about how the restart CLE plan addresses some of those needs for individuals and I know that's a concern of yours personally, so.
Mayor Frank Jackson:
The impact of it is, if you look at the recession of 2008 and nine, that's mild compared to what this thing has already become faster than the recession of 2008 and nine. We've gotten there faster, is deeper already and a trajectory for recovery is much longer. Which means the impact of that on business resulting in the impact of employment and things like that is going to be around for a while.
Mayor Frank Jackson:
So people have lost their job, but they have mortgages, they have rent, they have utility bills, they have all these things that a business would have, but they don't have the ability to sustain themselves. So we want to do, we want to prevent homelessness, so we put the bulk of the social service dollars into rent subsidies. They help people in terms of their rent or lease arrangements.
Mayor Frank Jackson:
And it does not matter, because these are HUD dollars, this portion of the money. And so there's certain HUD guidelines. And what we're saying, we're not going to be asking people for their filing of taxes for 2019 to demonstrate that they're ineligible for the funds, we're going to be looking at them right now. And right now they ain't got no money, [crosstalk 00:16:39], so they all qualify, right?
Mayor Frank Jackson:
So as a result of that, then we can assist them as they wait to see if in fact they get re-employed or if their unemployment benefits kick in. So that means we will have to stay on it and monitor it and recertify people at least on a monthly basis, because once they begin to receive income, then the eligibility will either be modified greatly or they won't be eligible anymore. And we can use that money to help someone else.
Mayor Frank Jackson:
We're looking at people who are in homeless shelters or have deficient immune systems, HIV-AIDS, and we're looking at how do we help them and help the County as the County provides that service. And when we help, if I can back up, when we help the tenant, we're also helping the small business landlord, who now is forced by a moratorium on eviction to have people at their property, and they cannot lease that out and have revenue coming in. So we're looking at all of that too.
Mayor Frank Jackson:
And food service, don't let me forget that. A high demand at the food bank. Utility bills are other type of assistance that people just need help on, until such time as they go back to work in some fashion or receive unemployment benefits. And then we just move those resources to another, to someone else in need.
Ray Tarasuck:
Mayor, about a month or so ago you did an interview with the City Club, was early in April. And I listened to that particular discussion you had with the City Club. And I recall in that discussion that you had said that, this was very early on in this whole process, going through this. I recall in that discussion that you had said that the city had foresight to build into the budget in anticipation of a recession coming ahead.
Ray Tarasuck:
And that you would really know really in the next month going forward, what kind of impact this is going to start to see on the city. At that point in time it was really too early to see what impact it was going to have. Could you comment now about a month or so later after we've seen maybe six weeks go by about that cushion, I think that's in that budget and what we're looking at going forward now?
Mayor Frank Jackson:
Well, the good thing about going through hard times is that you can almost smell it, it's like having street antennas. So we fully recognize that even though the economy was doing quite well, even stock market at that time, that it did have an artificial field to do it, and that eventually we will want to have a downturn. Our expectation was that it would probably be in the fourth quarter this year or early next year, first quarter next year.
Mayor Frank Jackson:
But as you can not predict these things, and the pandemic came, which meant that what we expected to happen in the fourth quarter of this year or the first quarter of next year, it happened immediately.
Mayor Frank Jackson:
Fortunately, we did build in a recession type budget, that if it happened when we anticipated, and depending on the level of the recession and terms of the death and of the recovery time, we figured that we built in a year and a half and maybe a year and a half at the most, maybe two years, but year and a half of our ability to provide goods and services to people and not have to have layoffs and things like that, and we would be able to manage it. Of course, it came much sooner than we expected, much deeper than we thought it would be. And it appears the duration is going to be much, much longer than anticipated.
Mayor Frank Jackson:
So with that in mind, we now are monitoring our revenue streams because of lack of social gathering and mass gathering. And as you know we're a consumer economy and our downtown is built on having large numbers of people milling around at sporting events, restaurants, conventions, and things like that, being in hotels. All of the revenues associated with that are pretty much gone, or there's hotel taxes or parking tax, admission tax, all of those. And so we're looking at that.
Mayor Frank Jackson:
And then we looked at the revenue coming from income tax, and the revenue coming from payroll tax, since it did not happen really until April when you begin to see the real downturn, the receipts coming in all the way through March were on the positive side. Not only were they at budgeted projection, they were higher.
Mayor Frank Jackson:
But as we look at April, April has already taken like a six or $7 million hit in that payroll tax line, which is the bulk of our revenue stream. And so when we look at, as we monitor May, and we get a sense as to... And looking at this gradual reopening, and I will say the governor is much more responsible at doing this than I've seen his counterparts in other parts of the country.
Mayor Frank Jackson:
But as we look at that, in May we'll be able to see now, is it consistently low at this level and this is what we can expect. Is it going down even deeper? And then that will inform us which plan we begin to implement in terms of cost cutting. We've already done the hiring freeze, we've already done some procurement freeze, we already have done some things to cut costs and maintain costs, but the bulk of our cost is in personnel and benefits.
Mayor Frank Jackson:
And this income tax going into May will give us a pretty good indication as to what steps we should take going forward to doing further cuts.
Mayor Frank Jackson:
Now, let me add on to that. That's just based on the economy. When you look at what is happening in terms of government and revenue sharing between various government entity, from the federal and state level, we're expecting now, particularly since the governor made his announcement yesterday. We believe that those announcements... Well, we know that those announcement are affecting people in terms of Medicaid or schools in terms of their increase in cost in their budget.
Mayor Frank Jackson:
But what we expect is the next round of cuts will be in terms of direct revenue sharing with cities. And if that happens, then we're probably talking about tens of millions of dollars throughout the year. And you add that along with the reduction in revenue receipts from the lack of activity in payroll, that you can see it will get pretty deep and eat up whatever reserves we have very quickly. If that helps, if that's explanatory enough.
Ray Tarasuck:
No, it's certainly going to be challenging. It'll certainly be challenging [crosstalk 00:00:25:12]-
Mayor Frank Jackson:
Yeah, but see, that's the good thing about, see hard times is what we do. I don't have a problem with hard time, I would prefer it to be good times, but I also know that you plan for hard times in good times. And then you plan for good times in hard times. And we've been through difficult times, and we will get through this. How it will look at the end of it becomes the question. We had planned on hard times where we could manage it in a way that the look would be pretty much the same, you go through it and it's effects, and the feel of it would not be as severe. This is not going to be that.
Michael Bowen:
So mayor along those lines, operationally, what has changed in the last six weeks and what has changed moving forward within how you're running the government city hall, specifically looking at public safety. People a lot of times say-
Mayor Frank Jackson:
I know people look at first responders and they talk about public safety and that's usually the ones they talk about when they talk about layoffs, well, we're going to have to lay off public safety. But we're a city, we provide everything from public safety to building and housing permits to filling potholes, cutting vacant lots, cutting around abandoned housing demolition.
Mayor Frank Jackson:
So, all of what we do is essential. It all depends on what services you need. If you need a policeman, that's essential, but if your trash didn't get collected, that's essential, right? So it all depends on what services you need.
Mayor Frank Jackson:
And so what we do, we look at all of that, right now all of our essential services, you don't know the difference. Police are out there in full force, we just graduated a class of 72 yesterday, which I will say at least half if not more were minority and females. Right?
Mayor Frank Jackson:
So we've done a great recruiting effort around that, but the police are out there, emergency medical service is out there, fire is out there in terms of public safety. We have our recreation centers are closed, so that's off to the side. But our street programs in terms of resurfacing potholes, all that's going forward, waste collection, you wouldn't know the difference.
Mayor Frank Jackson:
So other than just a few services that allow for facilitated mass gatherings like recreation or too many people in one spot, you wouldn't know the difference.
Mayor Frank Jackson:
Now, moving forward, if we are forced to, because of economic and revenue sources, for us to do layoffs and reduction or elimination of service, then people will see the difference. Right now there is no difference. As we move forward, and we look at if we have to take a deeper cuts and we'll look at where they are, what those impacts will be on our operation and where we will have to prioritize where that is, there is no way that you can avoid safety, because that's about 65% of the budget.
Mayor Frank Jackson:
Now, let me add something else in, that people don't think about much. We own utilities, and we own the airport. They're enterprise funds, which means they cannot subsidize general fund, but general fund can subsidize them. Fortunately, both of them had a pretty good healthy cash balance. But this downturn in the economy is significantly impacting activity at the airport.
Mayor Frank Jackson:
So whatever cash balance that they have is beginning as they try to keep the airport open and stuff, and the airlines are not having passengers, so you don't have landing fees and you don't have in payment fees and all that, that revenue stream for the airport is going down. And so they are going to have to begin to use some of that cash balance in order to maintain just a basic opening of the airport. So we're looking at that. And that's not supported by any taxes, because their enterprise account is a fee service operation.
Mayor Frank Jackson:
When we look at utilities and there's a moratorium on cutoffs, and people not paying their bills. And we reconnecting people who previously had got cut off. So they had a healthy cash balance, but as people kind of hold their money back and don't pay the bills, we restore services to people who haven't been paying bills and they're not going to pay now, that cash balance will begin to kind of dwindle too as their revenue stream goes down. But their costs, even though they're reducing costs, their revenue strings will go down.
Mayor Frank Jackson:
So in terms of clean public power, electricity, in terms of division of water, and in terms of airport, those enterprise funds that are fee services, they're now associated with general fund, which is tax service. They still are feeling the impact is fortunate that they had healthy cash balances, but that too, as you know when you run a business, you can only sustain yourself with reduced revenues that are below your cost for only so long.
Ray Tarasuck:
Now, Mayor, we want to thank you very, very much for taking the time today to speak with us and those in our audience. We've got about 60 people that are participating in this webinar today. And as we wrap up, again, thank you very, very much for your time today, but what would you like to leave our audience with today? What message would you like to leave our audience with today as we move forward?
Mayor Frank Jackson:
Don't panic, don't panic. If you panic, you're going to lose. And we're in a fight, we're in a struggle, and there are different dynamics comming every day from every different direction. And if we panic in that situation, then we're going to lose. If we get caught up in the politics of it, meaning, not Democrat or Republican, but if we get caught up in the politics of what it should be done in all of this, and if we get caught up in this huge debate. While we're talking, the thing is still moving on and it's getting worse and we will be left behind.
Mayor Frank Jackson:
So we need to do action, and that's part of what we're attempting to do, we're attempting to do action. Do we believe that the action that we've taken is sufficient to address the totality of this pandemic? No. Do we believe that the action that we're taking is having an impact, particularly on the suffering and the burden of people and businesses, particularly small businesses. And do we believe that enjoying what we're doing is going to better position people in businesses for a trajectory for recovery? Yes.
Mayor Frank Jackson:
Do we believe that this is the panacea that's going to define what Cleveland will look like socially and economically going forward? No. We are in a defining moment and what's normal today will not be normal tomorrow. So in order to address this we have to be clearheaded, we have to be strategic, and we have to be selfless in terms of our agenda, if we really concerned about the survival of this city, which means the survival of it's businesses and it's people. We cannot do this in a selfish mode. We cannot do this panicking. We cannot do this based on ideologies or agendas. We can not do that.
Mayor Frank Jackson:
And finally, out on the streets they say a scared man will get you killed. And as true as it can be. And if we go into this and we're in this fight and we scared, we're going to die. So that means that we got to suck it up and deal with it the way it needs to be dealt with, and make sure that we come out of this in a way that people and businesses will be better off and so will the city of Cleveland.
Mayor Frank Jackson:
And finally, equity is a key issue. This pandemic has pointed out what we already have talked about for a long time, the disparities and inequities associated in way in which our social and economic system works. And if we do not address that in our new way, in a new norm, then we would have failed, because they're staring us right in the face.
Ray Tarasuck:
Mayor Jackson, thank you very much. Thanks for taking the time today.
Mayor Frank Jackson:
[crosstalk 00:35:00] I appreciate it. I appreciate it, thank you.
Ray Tarasuck:
Appreciate it.
Michael Bowen:
Thanks.
Mayor Frank Jackson:
Bye-bye. Take it easy.