PROPOSED ADJUSTMENTS TO FY 2020 21 PRELIM OPERATING BUDGETS

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Cancelled tourism, conferences, sporting events, concerts, and other large-scale gatherings, have contributed to the economic damage. The ever-changing guidelines from the various leading agencies dramatically alter and continue to impact the public's behavior and use of the District's facilities and services. We now anticipate that several revenue sources, largely related to the Recreation division, have and will be impacted by mandated closures, decreased capacity during reopening and elimination of programs due to increased costs for compliance with the various re -opening guidelines. Recreation expenses are also expected to decrease. In addition, it is unclear whether there will be a surge in COVID-1 9 infections among the millions of people who have left their homes to participate in nationwide protests. If a spike in new cases were to occur, it is unknown if the previously lifted restrictions will be reimplemented or if re -openings will be slowed or halted. The proposed Operating Budget Adjustments reflect staff's best estimates. Ultimately, COVID-1 9's impact to the District's budget will depend on the severity and duration of the crisis. Nationwide Protests To further add to the budget uncertainty mentioned above, six states and 13 cities have declared states of emergency, and the National Guard has been called to help in 21 states and Washington, DC. At least 26 cities across 16 states have imposed curfews. Global markets have focused more closely on the brewing tensions between the US and China that have been renewed in recent weeks, and economists warn that civil unrest could be a negative catalyst for stocks. Continued unrest could threaten consumer confidence, a cornerstone of the economy, and hurt local governments and cities already reeling from the coronavirus crisis. The impacts of global markets on the District's investments due to COVID-19 are reflected in recent investment reports which advise that the District's portfolio mix provides a hedge against rapidly failing yields and throughout March, the District's yield has been declining steadily due to COVID, but is not expected to fall below 1 %. It is unclear what additional impact a further reduction in consumer confidence due to civil unrest would have on the District's portfolio. State Budget V.0 The State budget is similarly uncertain for the reasons mentioned above, but currently there is no expectation of a State takeaway of local resources in Fiscal Year 2020-21. Various legislation is proposed to provide assistance to local governments. Additionally, legislation raising the minimum wage from $10/hour to $15/hour from 2017 to 2022 will have an incrementally increasing impact on the District's budget, as will the anticipated ongoing increases in pension costs. Property Tax Revenues P-41