In the wake of the economic turmoil caused by the ongoing coronavirus pandemic, Bowling Green leaders are projecting a drop in income tax revenues.
However, the full weight of the decrease there and in other areas isn’t yet known.
“I think it’s going to be tough,” said Councilman Greg Robinette, speaking during Monday’s Bowling Green Council finance committee meeting, held to get a picture of the city’s monetary situation.
“Although we don’t know the scope of the reduction, we know it’s going to be red ink and we’re just going to have to wait month-to-month to see what’s the reality.”
Brian Bushong, the city’s finance director, presented a report to the committee. He said that Bowling Green, like many other communities across Ohio, actually had a very good first quarter of income tax collections, up more than $252,000 through April.
May revenue numbers are just coming in.
“Now, I believe, (we’re) really starting to see the effects of the activity, the business activity that has gone down,” Bushong said.
The question remains just how much of an impact the city is likely to see.
Bushong said estimates based on surveys and reports from agencies such as the Ohio Government Finance Officers Association, National League of Cities and the Regional Income Tax Agency, which were issued at different times in the last few months, have varied widely.
The NLC projected that states such as Ohio, which have income taxes, would be most impacted; they estimated a loss of 30.4% in revenues for the state overall.
Unemployment numbers in Wood County jumped – from 4.6% in March to 17.1% in April – as the pandemic crisis deepened. However, that number trails most surrounding counties, which have been harder hit.
Bushong said that currently, his best estimate is that BG’s income tax revenues could see a net decrease of $1.1 million between June and December, or about a 5.26% drop. During the Great Recession in 2008, the city saw a 5.1% drop, and decreases of 4.5% and 0.7% in 2009 and 2010 respectively.
The worst month for this year’s collections is currently projected to be July, with a loss of about 15%.
“We won’t know that until it happens,” said Bushong. “And we’ll keep watching it and we’ll keep adjusting.”
Income tax is only one concern. The city’s General Fund — while it receives a large portion of its monies from income tax revenues — also is funded by the utility kilowatt tax, interest income, funds from the county, ambulance runs, court costs and the hotel/motel tax, among others, all of which are projected to decline.
One area discussed by Bushong is the parks and recreation department, which receives funds from income tax, property taxes and charges for services such as rental fees, pool and community center admission, and exercise classes.
“We’re concerned about parks and recreation and the impact that the COVID-19 has had on their operations,” he said, noting the department is currently estimated to lose more than $484,000.
Nearly $456,000 of that loss is expected to come because of the decline in charges for services.
Bushong said that one area of savings for the department will be not hiring seasonal employees this year.
Bushong said that there have been some increases to the city’s revenue, such as Bureau of Workers Compensation rebates from the state amounting to nearly $300,000, though those monies are spread over a number of different city funds; $15,000 from the federal government for COVID-19 supplies, and some grant dollars from the federal and state government that reduced the local share for transportation.
He also said a bill in the Ohio legislature, already passed by the senate, which would distribute federal funds allocated to the state via the state local share formula could also put more money in the city’s hands if it becomes law.
Bushong further said the city has already instituted a hiring freeze, and that department heads have been asked to submit budget reductions.
“We’re looking at those,” he said. “We haven’t taken action on that but department heads need to be looking at their budgets and see where do we go from there.”
There is also the potential for eliminating salary increases which were built into the 2020 budget.
Answering a question from Councilwoman Sandy Rowland, Bushong said that all five of the city’s unions have contracts coming due this year, and that “a couple” of those have agreed to freeze salaries and extend their negotiations into next year.
“They haven’t all done that,” he said. “We’re starting negotiations with one of the other unions. I think certainly with all the other items in the news our position is going to be no salary increases this year but we’ll negotiate in fairness here.”
Robinette said that Bushong’s report “sets the stage for where we are as best we know today,” and will help them be ready as more information become available in the future.
“I think we’re going to be prepared for the reality when fewer people are working and paying income tax,” he said.
Another finance committee meeting, to receive further information, as set for July 20 at 6 p.m.