Some 2021 projects still planned despite COVID-19 impact on Gahanna's coffers
The COVID-19 coronavirus put a drain on the city of Gahanna's revenues in 2020 and is expected to continue into 2021.
City finance director Joann Bury said the pandemic certainly will affect 2021, but she realizes the severity is difficult to predict.
“The full financial impact on 2020 is still unknown and may not be known until the end of the first quarter of 2021,” she said. “The hospitality and tourism industries continue to struggle, and many are closing their businesses or reducing staffing to stay afloat. There is also the workforce shift from brick-and-mortar headquarters to virtual headquarters, with employees working from home or other remote locations.”
Carrin Wester, the city's communications manager, mentioned the effect that reduced payroll has on the city's coffers.
"If people aren’t working at all or businesses are laying people off, they won’t be paying the city," she said.
In March, the Ohio General Assembly passed and Gov. Mike DeWine signed House Bill 197, which keeps employees paying to the city where they worked before the pandemic, even if they're working from home in another municipality.
As it stands, the law stays in effect until 30 days after the end of the pandemic.
Bury said HB 197 is "not a permanent bill."
"Should the pandemic be considered 'over' in 2021, this shift could result in lost income-tax revenue for the city," Bury said. "RITA prepared a rough estimate for all municipalities they service to provide everyone with an idea of what that impact may look like. I think it is a little high, so I do not use the full amount as determined by RITA but did take it into consideration when estimating what the city’s losses could be.”
She said the success of the coronavirus vaccine and how the latest relief package will be distributed also are unclear.
“With so many unknowns – and in the absence of a pandemic economic model to follow – we looked to the Great Recession (2007-2009) as the most recent significant economic downturn,” Bury said.
The city experienced a 9.5% decline in income-tax collections in 2020 through Sept. 30.
Bury said income-tax collections are roughly 75% of the city’s total revenue.
Based on 2020 data, she said, the city is preparing for and expecting an 8% decline of $1.5 million in income-tax revenue for 2021.
She projects a two-year loss of $3.5 million in income-tax revenue from 2020 and 2021.
“Because the city must continue to operate and provide valuable and necessary services, some savings will be used for 2021 in light of the predicted loss in revenue to maintain operations at an acceptable level and continue to move the city forward in a number of initiatives,” Bury said.
“As the COVID-19 pandemic evolved in 2020, our team responded effectively by making budgetary reductions and adjusting our operations and programming,” Mayor Laurie Jadwin said. “Although we were conservative in our spending, we were still able to carry on all of the essential functions of government and maintain excellent service for our residents.”
Jadwin said she remains focused on pursuing smart economic development and strategic redevelopment that best position Gahanna to compete with surrounding communities for jobs that will add to the quality of life for residents.
“Although it was a difficult year to embark on new partnerships due to the limitations imposed by COVID-19, we nonetheless were able to take significant steps forward, both internally and externally,” Jadwin said. “We are looking forward to continuing the work that we have started to lay a strong foundation for future economic-development growth in our community.
“Widening our jobs footprint within the mid-Ohio region will broaden our income-tax base and ease the burden in the event of any future economic downturns,” she said.
As part of Gahanna’s overall efforts to build a strong foundation for the city’s future economic vitality, Jadwin said, many changes were implemented internally.
She said staffing positions in multiple departments were modified to better align with necessary job functions, resulting in increased operational efficiencies.
On a larger scale, she said, plans were formalized to separate the Department of Planning & Development and create a new Department of Planning that will align the divisions of planning, building, zoning and code enforcement.
“These internal restructuring changes will benefit our efficiency goals, enhance our level of customer service and, ultimately, help to reduce spending in coming years,” Jadwin said.
Thanks to issue 12 (a tax issue approved by voters in May 2019 that changed the city’s income-tax rate from 1.5% to 2.5%) and dedicated income-tax funds in 2021, some capital maintenance projects will be fully funded in 2021, said Michael Schnetzer, Gahanna City Council's finance committee chairman.
“In the wake of the Great Recession and a decade of underinvestment in capital outlay, we have ground to make up, quite literally,” he said.
In 2021, $6.9 million will go to streets, bridges and other infrastructure, he said.
He said additional funds are budgeted for water lines, sewage lines and stormwater maintenance.
“Even in the midst of the economic downturn due to COVID-19, Issue 12 dollars are being utilized as intended to make up for years of deferred maintenance, which is vitally important to the health of our community,” Schnetzer said.
The 2021 budget can be found on the city’s website at gahanna.gov/gahannas-budget-process/.