Revenue down

Local governments will likely experience sharp revenue declines due to the COVID-19 outbreak and its impact on sales and income taxes.

MANSFIELD -- The financial impact of COVID-19 on local governments will be considerable, deepening as a national shutdown continues for at least another month.

Municipal governments, like the City of Mansfield, rely heavily upon income taxes, which will be sorely lacking as state jobless claims escalate to record highs. 

County governments such as Richland get the vast majority of their general fund revenue through sales tax, also likely to be down sharply during this tough economic time.

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Even with money from last week's $2.2 trillion federal relief package earmarked for state and local governments, it's not too soon for local officials to begin considering the impact on government coffers.

Gov. DeWine recently ordered a hiring freeze on state government positions except for those necessary to combat COVID-19. 

The governor also urged state departments to make up to 20 percent budget cuts to curb spending.

"We're looking to the departments to start coming together with a list of things that can be cut," DeWine said. "We have also pulled back a request to the state controlling board to spend money on a variety of different projects.

"The earlier we start slowing down spending, the more impact it’s going to have."

Linn Steward

Mansfield Finance Director Linn Steward and two of her staff members speak during a Mansfield City Council meeting. (Richland Source file photo)

Mansfield Finance Director Linn Steward, who had already said the city's 2020 appropriations budget was living beyond its means, told Richland Source she has deep concerns.

"I have deep concerns not only about income taxes, but other revenue such as permissive sales tax, gas taxes, and water revenue, due to the delay in installing the new water meters," Steward said. "I do not anticipate knowing the scope of any financial problems until mid-May."

Coronavirus itself has made finance department work difficult, Steward said.

"The finance department is doing our best to work from home, but we were not ready for this scope of a crisis," Steward said. "We had an emergency plan for working offsite at another city property in case of a tornado or fire, but not for a virus pandemic.

"We are lacking in laptops, and due to efficiency, using just three copier/printers at the office, my staff is struggling with being able to print reports as they can from the office. It is also a challenge for finance and human resources, due to so many changes in employment laws happening so fast.

"One bright spot is I don’t think there will be any criticism of the city having the budget stabilization fund now."

Mayor Tim Theaker was asked if he planned any cost-cutting measures.

"Our primary concern at the present time is the health of our citizens and our employees. We are scrutinizing each and every purchase and will continue to throughout this emergency," Theaker said.

Vero GOP luncheon

Richland County Commissioner Tony Vero (Richland Source file photo)

Richland County Commissioner Tony Vero said it's still too early to tell the impact of COVID-19 on finances. The county began 2020 with a $4.8 million budget carryover and budgeted expenses in line with anticipated revenue.

"While everyone anticipates less sales tax revenue, there are so many variables still in play such as: length of quarantine orders, increased revenue in other business (such as internet sales tax), employment rates, etc.," Vero said.

"The state is working on getting projections quicker, but it is just too early to tell. Once we are confident in some projections we will take the appropriate measures to keep the budget on solid footing," he said.

Vero said county Auditor Pat Dropsey is working with state officials and that Treasurer Bart Hamilton is reviewing county interest earnings.

"I believe we should know more in another few weeks. Then we will most likely sit down with Bart and Pat to discuss 2020 projections, and we will go from there," Vero said.

Dropsey said the first actual signs of the financial impact may not be known until mid-May. Vendors have 15 days after the end of a month to send sales tax collections to the state, which then has 45 days to disseminate to the funds to local governments.

The new internet sales tax being collected in Ohio this year will help offset some of the losses, but Dropsey said it's far too soon to gauge its impact.

City editor. 30-year plus journalist. Husband. Father of 3 grown sons and also a proud grandpa. Prior military journalist in U.S. Navy, Ohio Air National Guard. -- Favorite quote: "Where were you when the page was blank?"