Economy treading water amid coronavirus cross-currents

Kevin L. Hoover
Mad River Union

ARCATA – As 2020 and civilization itself wound down amid a transformative pandemic, the City of Arcata is closely tracking economic conditions and trends, and what is shaping them. With the economy reverberating from all kinds of impacts, and adaptation a daily challenge for individuals and businesses alike, forecasting is key to survival. And though COVID-19 vaccines and government aid offer hope, “economists still predict an economic depression from the COVID-19 pandemic,” states a City Council staff report. 

At its Dec. 16 meeting, the council again renewed the Local Emergency over the pandemic, then took an update on the status of Arcata’s economy and the budget outlook, based on figures compiled through Nov. 30. The short version: things are tough but stable – for now.

Purple Tier retail restrictions have hobbled and closed businesses. Restaurants are largely closed or limited to take-out service. Hotels are enjoying high occupancy, though long-term stays (over 30 days) and could, by law, reduce Transient Occupancy Tax receipts.

 Wastewater fee returns are down slightly, but rate increases that go into effect Jan. 1 may compensate for that. Revenue from sales tax and the city’s Transactions and Use Tax are actually higher than last year. However, some deferred tax payments may never be collected if the businesses who took the deferments don’t reopen.

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Fees from facilities rentals, recreation programs, parking meters, which feed the General Fund, are down, though staff reductions are helping to compensate.

A mid-year budget review in late February or March will include refined estimates. 

City Manager Karen Diemer estimated that all things considered, the budget would fall more or less in line with predictions. 

The less-than-disastrous assessment of city finances stems in part from conservative forecasting and anticipatory budget cuts. 

Newly minted Councilmember Stacy Atkins-Salazar thanked city staff and the previous City Council for that, saying that their groundwork is “really helpful for where we’re at right now.” Mayor Sofia Pereira echoed that sentiment.

Eviction protection

The City Council adopted 90-day tenant eviction protections in March, which were later extended. These were overridden by state legislation protecting residential tenants on Aug. 31, though a revision in the works could further extend the protection to Dec. 31 of next year. 

The council subsequently extended temporary protections for commercial tenants until Feb. 1, 2021.

The council is likely to reconsider the matter in January and adapt Arcata’s protections to whatever happens at the state level. 

City Attorney Nancy Diamond said it’s likely that the state’s legislation will again pre-empt any local ordinances.


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