HUDSON — Due to a strong revenue stream in the beginning of the year and some proactive measures, city officials believe they are in well-positioned to deal with an estimated $1.2 million in lost revenue as a result of the COVID-19 pandemic.
At a workshop last Tuesday, Council discussed the budget implications and potential reductions in connection with the coronavirus pandemic. With projections coming in about how much of an impact the job losses will have on local government, city staff presented a budget overview of the economic impact to be anticipated during this time.
"Due to conservative past budgeting and early actions taken to reduce expenses, the city is in a good position to weather this storm," said Hudson city spokesperson Jody Roberts.
Soon after the pandemic hit, Council deferred nearly $3.69 million in capital projects in anticipation of a pending reduction in revenues. Key projects such as the roads program were not deferred and will move forward.
The city also imposed a hiring freeze on all open positions and is not hiring back most seasonal and part-time employees. Full-time staff have been temporarily diverted to parks and golf course work that seasonal employees would normally have performed.
While working with less staff, Roberts said the city "continues to make sure the critical services are delivered for residents."
From January through April of this year, income tax revenue was 9.4% (or $755,000) over 2019, and the general fund balance was $558,000 higher than it was at the same point in time last year.
"This higher than projected revenue has put the city in better shape to ride out the economic impact of the pandemic," added Roberts.
Based on the Regional Income Tax Agency’s (RITA) current projections on the impact of job losses during the pandemic, the city could face an estimated $1.2 million loss in the general fund. RITA estimates there will be a 20% loss in income tax withholding in March through June, a 10% loss in July through September, and a 5% loss in months October through December of 2020.
With approximately $5.2 million in total deferrals over all funds, the city is projecting a fund balance of $24.775 million by the end of 2020, which represents a 34.59% fund balance ratio.
With the income tax filing and payment deadline extended until July 15, the city anticipates a delay in filing and payment of net profit and individual returns to August through November, which will impact its cash flow.
The city continues to monitor property tax delinquencies, the kilowatt hour tax, the gas tax, and the golf course income as the course had to close and then offer limited service for more than a month. A decrease in revenues is anticipated in all these areas, but projections are not yet available.
These are still only preliminary estimates, and the city will continue to monitor and report to council on the impact as the state begins its reopening plan.
Council will discuss the budget and other possible cuts in future workshop meetings.
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