Like most cities during the COVID-19 coronavirus pandemic, Hilliard will need to reconsider its budget in light of falling income-tax revenue from increased unemployment, according to city leaders.
But Hilliard is in a better place than many other municipalities might be, City Manager Michelle Crandall said.
“This will be a challenging time for all local municipalities, but Hilliard is currently in a relatively good position financially, assuming our (adjusted) estimated revenue projections hold,” Crandall said. “We have tightened our belts and will continue to monitor revenues and expenses closely moving forward, while continuing to provide our community with the high level of police and other vital city services residents have come to expect.”
Many businesses have been closed or have reduced operations or staffing since mid-March per state orders to limit the spread of the coronavirus.
But the city has a plan to mitigate the associated losses in revenue.
“The operating-budget changes need to reflect the anticipated reduction in revenues is being addressed by closing out existing purchase orders and by each department finding places we could tighten up for 2020,” said David Ball, director of communications for Hilliard.
The closure of purchase orders remaining from both the 2019 operating and capital-improvement budgets provide the city with $1.6 million in available funds to assist in addressing projected revenue losses, Ball said.
Closed purchase orders include those for materials, supplies and travel expenses, he said.
The city also will defer capital-improvement projects of $1.48 million, said city finance director David Delande.
But that amount is not part of the city’s operating budget, he said.
The city’s 2020 operating budget was $28.7 million and its original capital-improvements budget was $15.4 million.
The 2020 CIP budget has been cut by $1.48 million, achieved by reducing funds to be spent on parking-lot and path improvements ($350,000), detention- and retention-basin maintenance and improvements ($210,000), parts of the annual street-rehabilitation and improvement program ($200,000) and reducing or eliminating other projects, Delande said.
Concerning the operating budget, Delande said, the city will continue monitoring revenues and expenditures and will provide monthly reports to Hilliard City Council.
As of April 30, the city’s operating budget was reduced from $28.7 million to $27.8 million, according to Delande’s report to City Council on April 27.
The city collected revenue of $7.36 million in the first quarter of 2020, slightly greater than the $7.18 million collected during the first quarter of 2019, according to Delande.
But the first-quarter report, from Jan. 1 to March 31, is based on income-tax revenue that will not be distributed until the current quarter, Ball said.
Reduced revenue is expected in almost every category during the second quarter, Delande said. That includes income taxes but also interest, fines and permits, fees for services and local bed taxes for hotels.
Delande’s report estimates income-tax revenue for 2020 will fall by about 12%, from $29 million as originally projected to $25.4 million.
The city allocates 65% of income-tax revenue to the general fund and 35% t to the capital-improvements fund.
Meanwhile, the administration is looking for ways to shore up the expected loss of revenue without tapping into the city’s cash reserve of $7.1 million.
“It’s not our goal to use (the reserve fund),” Ball said, adding it is intended for emergency uses rather than the day-to-day operations of the city.
The city also is projected to have about a $1.8 million cash balance beyond the earmarked reserve, Delande said.