Butler County governments brace for big drop in revenues: What they’re saying

Most businesses are closed at Liberty Center due to the to Stay-At-Home order in place. The coronavirus pandemic is really just in its infancy here but Butler County governments are starting to take steps in case sales, income tax and other revenues tumble under shelter in place orders. The largest revenue source for county government is sales tax. While people are still allowed to shop, and are in some cases are spending a lot hoarding things like toilet paper, the projected $44 million in Butler County sales tax revenues is sure to plummet the longer the pandemic lingers. NICK GRAHAM / STAFF

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Most businesses are closed at Liberty Center due to the to Stay-At-Home order in place. The coronavirus pandemic is really just in its infancy here but Butler County governments are starting to take steps in case sales, income tax and other revenues tumble under shelter in place orders. The largest revenue source for county government is sales tax. While people are still allowed to shop, and are in some cases are spending a lot hoarding things like toilet paper, the projected $44 million in Butler County sales tax revenues is sure to plummet the longer the pandemic lingers. NICK GRAHAM / STAFF

Butler County governments are starting to take steps for expected drops in sales, income tax and other revenues due to the coronavirus pandemic.

The largest revenue source for county government is sales tax. While people are still allowed to shop and in some cases are spending plenty hoarding items like food, cleaners and toilet paper, the projected $44 million in Butler County sales tax revenue is sure to plummet the longer the pandemic lingers. Sales tax amounts for 40 percent of the county general fund revenues.

Almost 3.3 million Americans filed for unemployment benefits last week, 4.7 times larger than the old record for a week, which was set in October 1982. In Ohio for the same week there were 187,780 initial jobless claims, up from 7,042 a week earlier.

Commissioner Don Dixon said this bleak picture will surely hit the county’s budget, but no one knows by how much.

“We’re tracking it as closely as we can right now, we’ve communicated with all of our office holders, we don’t know where this thing’s going but we know it’s not going up for a little bit,” said. “We’ve asked them to hold the budget, save where you can because we don’t know what the picture is going to look like.”

The county was poised to erase the general debt by year’s end and also planned to have $14 million in the budget stabilization fund by then.

“I think we have one of the strongest balance sheets in the state,” Commissioner T.C. Rogers said. “We’re fortunate that we do have resources in a strictly unforeseen crisis like this. But that doesn’t mean we’re still not going to be prudent and diligent in using those resources.”

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County Administrator Judi Boyko said other revenue sources are also vulnerable, such as investment interest, hotel tax, property tax, building permit fees, recorder/transfer fees to name a few. She plans to have the finance department calculate possible budget impact scenarios. Looking back to the Great Recession in 2008 will be instructive, but she doesn’t believe the pandemic will have as detrimental an effect as that crisis did.

“The modeling will allow the county to predict discrepancy between revenue projections when the 2020 operating budget was calculated to now,” she said. “With unrealized revenue collections, the Board of Commissioners will have data to determine if any budget reductions are necessary.”

A large portion of cities’ revenues are derived from income taxes, but with bars, restaurants and other non-essential businesses closed, those revenue streams are also expected to drop. Hamilton culled almost $29.4 million in earnings taxes last year, which represents about 53 percent of the general fund revenue.

Hamilton City Manager Joshua Smith offered his council several scenarios Wednesday night that ranged from a 5 to 25 percent general fund revenue drop. The city is freezing all hiring – except for safety and health services – stopping non-contractual raises, reviewing capital projects, suspending out-of-state travel and creating a Rapid Reopen Team to help business owners after the pandemic subsides, among other steps.

“Our analysis shows that we have built adequate reserves and can handle a mild to moderate revenue decline scenario through the end of 2021,” Smith wrote in a report to council. “With that said, the Executive Leadership Team felt it was prudent to take immediate, proactive steps to conserve cash in the near term.”

Interim Middletown City Manager Susan Cohen said income taxes totalled $26.3 million last year, and the council budgeted $24.1 million for this year before the pandemic struck. Earnings taxes make up about 59 percent of the general fund budget and 26 percent of all revenues.

“It is too early to understand the full ramifications of this slow down on our financial outlook,” Cohen said. “We will continue to monitor and will address city expenditures and staffing as necessary to address this situation.”

Fairfield City Manager Mark Wendling said the city will work with residents who owe taxes during this tough time but needs money to provide services. Revenues will also be impacted with the 90-day tax return extension.

The city collected $32 million in income tax last year, including $25.8 million in the general fund, which represents 78 percent of the revenues for that main operating fund. About $6 million is split between capital and street improvements.

The city had a total $19.2 million general fund balance at the end of February and keeps a 25 percent reserve, or almost $7.7 million. Wendling said as a precaution the city has deferred non-contract raises.

“We’re in pretty good shape,” Wendling said. “We have a really healthy reserve, which obviously we would prefer not to spend down, but it’s there for these types of situations.”

Townships do not generally collect much more than property taxes, but income taxes are allowed in Joint Economic Development Districts. Last year, Fairfield, Liberty and West Chester townships collected $700,000, $2.6 million and $1.8 million respectively in JEDD income taxes.

The West Chester Twp. trustees this week approved a pool of $194,098 for raises up to 4 percent, for about 60 non-union employees. The merit raises won’t take effect until July.

Township Administrator Larry Burks acknowledged it might seem odd to approve the raises during such uncertain times, but he said the township needs to keep its talent. The raises can be cancelled if the budget is strained too much, he said.

“We understand there is a squeeze on the state and that squeeze is going to trickle down at some point,” Burks said. “We will be monitoring it closely and if at any time, you have my word on this, if at any time I don’t think we can carry the load I will be back to you with more information.”

It will likely take some time before — or even if — property tax revenues will suffer.

“It is too early to know what this all will mean to the township’s revenue stream, but it will be closely monitored as we navigate this unprecedented time,” Liberty Twp. Administrator Kristen Bitonte told the Journal-News. “As for community services, Liberty Twp. remains committed to being responsive to our residents and community needs to the best of our ability during this challenging time.”

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