The closing of stores and lost customer traffic resulting from COVID-19 not only is impacting the Mount Airy business community economically, but also is afflicting the city government’s financial well-being.
One symptom directly resulting for municipal revenues in relation to declines in retail, restaurant and other activity involves the sales taxes normally generated among such businesses, which are a key funding source.
“From data we are receiving, we are anticipating an approximate decrease of 20% in sales tax for the last quarter of our 2019-2020 budget year,” City Manager Barbara Jones lamented in outlining effects of COVID-19.
“We are looking at a potential loss of $1.5 million in revenues,” Jones added regarding that scenario for the remainder of the present fiscal year ending on June 30. This would represent a significant hit to Mount Airy’s funding picture overall, with a total of $13.5 million budgeted for 2019-20 last June from all sources, including property taxes.
Such a shortfall could require dipping into the city government’s unassigned fund balance, or savings, in order to offset the sales tax losses, a source that officials have had to rely on for other needs in recent years. It stood at $7.6 million at the end of the most recent fiscal year.
The city manager explained that the projections for lost sales tax revenue for the end of this fiscal year and the one upcoming are based on information from the N.C. League of Municipalities and economists it turns to for trends and projections.
“As we all know, everything we are seeing right now is a best guess due to the many unknowns of how long we will be impacted,” the city manager acknowledged.
But the result will not be rosy in any case considering what is occurring with the private sector locally.
“The economic impact this is having on our local business owners and employees is also devastating,” Jones commented.
“I am grateful for our business owners and their grit to keep things moving and working to provide food and many other resources for this community.”
Along with sales taxes losses for the remainder of the present fiscal year, the downturn will linger into the next one that begins on July 1, according to Jones, who has examined the impact along with city Finance Director Pam Stone.
“We are continuing to monitor, but as of now are looking at projecting a 10% decrease in sales tax for 2020-2021,” Jones stated while echoing the concerns of many others during what is an unprecedented period in world history.
“This is clearly a scary and uncertain time that none of us have ever experienced.”
Another area the city manager says will be impacted by the coronavirus involves additional overtime costs accumulated by municipal employees during the crisis.
“I don’t have an amount available right now, but know we have definitely had overtime.”
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Source: https://www.mtairynews.com
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