Spending cuts likely in Groveport's 2021 budget
As the city of Groveport begins to put together its 2021 budget, the impact of the COVID-19 coronavirus pandemic will influence decisions and likely lead to a reduction in expenditures.
In their midyear financial forecast and budget review to Mayor Lance Westcamp and Groveport City Council, city administrator B.J. King and finance director Jason Carr anticipate "a 10% to 15% reduction in expenditures in the 2021 budget."
Income-tax collections through the first six months of the year dropped 11% compared to the same period in 2019, Carr said.
City officials expect to begin budget discussions in early September, with City Council approving a 2021 budget by December.
"We'll just have to budget appropriately," Carr said. "We've adopted financial policies for a reason, so we're just going to continue to follow those and have a different budget than we've had in the past."
The city anticipated $18.7 million in income-tax revenue this year, but projections now are about $2.8 million less.
Much of Groveport's income-tax revenue comes from warehouses operating in the Groveport Commerce Center.
Although warehouses are considered essential businesses, the concern is that companies might not be making as much profit during the pandemic.
The city's income-tax revenue comes from three sources: withholdings from workers' paychecks; taxes on companies' net profits; and residents who did not receive a credit from taxes paid to another municipality or those who live and work within Groveport city limits.
More than 80% of Groveport's income-tax revenue comes from withholdings, Carr said.
"Where we're seeing a drop is on the net-profit side, so either businesses are not making the same profit they were last year or they're holding onto their estimated net profit payments," he said. "It could be based on the federal filing dates. The other part is maybe they're not making the same level in profit."
Since 2016, the general fund receives the largest portion of income-tax revenue, nearly 90%. However, other funds, such as "rainy day," debt service, street maintenance and repair, recreation and the city's aquatic center and golf course, also rely on income taxes.
"We've already told those departments to be aware that there might be less money being able to be transferred because of income taxes being lower than planned," Carr said.
As part of the Coronavirus Aid, Relief and Economic Security Act, Groveport received $128,387 to assist with salaries and benefits, cleaning and sanitation and more related to the pandemic.
State lawmakers approved allocating millions of dollars in federal funding to help local governments recover from the economic effects of the pandemic. Approximately $350 million went to local townships and municipalities.
"Nobody was laid off or furloughed," Carr said. "We put people on administrative leave and people kept receiving a paycheck based on how much they were supposed to work."