STOW – The city’s 2020 Budget Oversight Committee knows the budget will require reductions and big choices, its president, Stave Hailer, said at its initial meeting May 7.
"The city is a business," said member Dennis Altieri. "We have to make hard decisions for the city to survive. The needs need to be addressed and wants prioritized as funds become available."
Director of Budget and Management John Earle said the city is working on a model to predict revenue but they need actual information for April; an average city is looking at a 20% to 30% reduction.
"But this isn’t final," Earle said. "Right now there are too many unknowns for an accurate forecast. With reopening, we’re hoping it will be closer to the 20% than the 30%. The reopening is happening a little faster than most observers thought."
Some funds deposited into the city’s revenue are from last year and don’t reflect the impact of the COVID-19 pandemic, he said. The lodging tax, which funds planning and economic departments, is filed quarterly with the city. The first quarter represents the last three months of 2019.
"The second quarter will be very low, but the balance in the [lodging tax] fund will sustain it for this year," Earle said.
The gasoline tax comes from the state monthly and is one month behind, Earle said. There was no change in the trend in March but April’s funds will be distributed in mid-May. The state is predicting a 40% decrease for the year.
"The gasoline tax will fall dramatically because of the fall off in passenger mileage," Earle said. "It’s an add-on tax to gasoline purchases."
The property tax, which is about $8 million for Stow, is distributed twice a year, Earle said. The first half on the budget was before the coronavirus. The second half is due mid-July but the county offered payment plans for property taxes and could extend collections beyond settlement dates.The amounts are the same but collections could be delayed.
The income tax from 2019 won’t be dramatically affected but next year the annual returns will reflect 2020 and no one knows what that will be, Earle said. The city usually collects $5 million in annual returns by April.
"It’s a crap-shoot to predict 2020," said Finance Director Jim Costello. "The feds are talking about delaying income tax further to September or December 15. That will cause a real domino effect. The state follows and then the city follows. That will cause a real hardship on the income tax side."
Like the schools, the city could face cuts from the state such as the local government fund which was cut about a dozen years ago from $2 million to $825,000 and can be cut completely to balance the state budget, Earle said. Also reimbursement from the county of the $650,000 from the 10% rollback on property taxes and the 2.5% on homestead properties which is made up by the state may be eliminated. The city lost $750,000 in Estate Tax when the state eliminated it a dozen years ago.
On the positive side, Summit County received nearly $100 million in funding from the federal government from the more than $2 trillion Coronavirus Aid, Relief, and Economic Security Act that Congress approved in March.
The city is tracking every expense related to COVID-19 and applying for reimbursement, said Mayor John Pribonic.
"It has to be spent by Dec. 30," said Director of Public Services Nicholas Wren. "We’re already over $50,000 in actual purchases and each department is tracking hours for cleaning and fogging city buildings and vehicles."
In addition, the city’s expenses have been reduced by canceling summer programs and activities, Pribonic added.
Gannett reporter Laura Freeman can be reached at firstname.lastname@example.org