Print
Coronavirus

City, County Anticipate COVID-19 Budget Impacts

By Christina Haley O'Neal, posted Apr 8, 2020
As the novel coronavirus pandemic continues to impact the Cape Fear region, local government entities are expecting to take a hit with their coffers.

So far local government spending on the crisis has reached about $154,000 between the city and county, according to initial figures released by the New Hanover County and the city of Wilmington this week. 

The city so far has spent about $60,000 on coronavirus response efforts out of its budget this fiscal year, said city spokesman Dylan Lee, adding that the spending includes money for office supplies, equipment, janitorial services, medical supplies, tools and personal protective equipment.

"While we have that money, we are tracking it because the state has declared this a disaster. And so we are tracking that money, and we will pursue the line of reimbursement similar to what we did with [Hurricane] Florence, if that is available to us," Lee said Wednesday.

And as government spending on the crisis continues, impacts to a major source of revenue for both the city and the county will take a hit, as stay-at-home orders put a strain on local businesses and consumer spending.

In this fiscal year, sales tax represents nearly 24% of the total general fund revenues for the city, Lee said.

“We expect significant impact to sales tax revenues for March, April, May and potentially June. We are modeling for scenarios ranging from 30-70% reductions in sales tax for those months,” Lee said.

New Hanover County is facing similar impacts on its budget and sales tax revenues. 

New Hanover County has paid roughly $94,000 for supplies and equipment in response to COVID-19, said Lisa Wurtzbacher, the county’s CFO, in an email. The county, however, has more purchase orders and other items that it is anticipating in the coming weeks, she said.

New Hanover County's finance department brought a budget amendment to county commissioners Monday for approval, she said.

The amendment for $1 million from the fund balance is to cover the current and future costs of the preparation for and response to the COVID-19 event, officials said. The board voted unanimously to adopt the ordinance for the budget amendment at its Monday meeting.

On top of that amendment to prepare for unanticipated costs to the county, it is also monitoring additional impacts of the crisis on the county’s current and future budget.

“While we are monitoring very closely the impacts of COVID-19 on the current year budget, we are also taking a very conservative approach in the development of the FY20-21 recommended budget in anticipation of longer term fiscal impacts resulting from COVID-19,” Sheryl Kelly, the county’s budget officer, said in an email.

“We are making adjustments to projected revenues that are vulnerable to COVID-19 related economic disruptions, and we are identifying expenditures that could be deferred or eliminated altogether,” she said. “These proactive measures will place the county in a better position to effectively respond to any long-term fiscal impacts of COVID-19, as well as ensure that we maintain a healthy fund balance moving forward.”

Sales tax distributions are a primary source of revenue for the county, representing 22% of its overall budget revenues for the county’s general fund, states a memo from Kelly and Wurtzbacher to the county commissioners.

“While distributions to date are currently on target to meet our budget projections for this fiscal year, we do anticipate a substantial reduction in these distributions for the duration of stay-at-home orders and required business closures both locally and across the U.S,” the letter states.

Sales tax distributions will be impacted through least the month of April, during which the county's stay-at-home order is in effect until April 13. Gov. Roy Cooper has also issued a stay-at-home order statewide, which also limits some business, until the April 29. 

Both the state and county orders indicate that the dates can be revised.

“County distributions from the state are received two months following the collection period, so specific data on the impacts this month (April) will not be available until the end of the fiscal year,” said Kate Oelslager​, communications and outreach coordinator with the county.

It will be late May before some of the initial impacts on those distributions are known, the memo states.

"However, we are confident that these distributions will fall short of the roughly $7 million monthly budget for sales taxes until commerce returns to a normal rhythm, and our year-end fund balance will be affected accordingly," states the memo. 

The same is true for the city of Wilmington.

"The way the sales tax comes back to us, it is delayed. Only after April will we start to see what happens January, February and March. So we have not seen any sales tax reimbursements for the period affected by COVID-19," Lee said. "We can only estimate."

For this fiscal year, he said, three months of the city's fiscal year budget will see diminished sales tax returns. As the crisis continues, he said, there are more long term impacts for anything after July 1, when the new fiscal year begins.

"We're in the midst of the budget discussion and this is clearly a part of that," Lee said. "Because we don't know how long this is going to happen, and we do know that as long as it's happening it will have a negative impact on our income, it is playing a significant part in our budget discussions for the upcoming fiscal year."  
Ico insights

INSIGHTS

SPONSORS' CONTENT
Gretchen roberts 2021

5 Finance Topics Every Small Business Owner Should Master

Gretchen Roberts - Red Bike Advisors
Pfinder john zachary

What You Need to Know About SECURE 2.0 and Its Effect on Individual Retirement Accounts

John B Zachary - Pathfinder Wealth Consulting
Jessiepowellheadshot webversion

5 Reasons to Build Custom Franchise Software

Jessie Powell - Wide Open Tech

Trending News

City Club, Event Center On The Market For $7.5 Million

Emma Dill - Apr 16, 2024

Wilmington Tech Company Tapped For Federal Forestry Contract

Audrey Elsberry - Apr 15, 2024

Commercial Real Estate Firm Promotes Adams, Mitchell To Vice President Roles

Staff Reports - Apr 16, 2024

New Hanover Industrial Park To Get $3.3M In Incentives For Expansion, New Jobs

Emma Dill - Apr 15, 2024

Gravette Named Executive Director Of Nir Family YMCA

Staff Reports - Apr 16, 2024

In The Current Issue

Surf City Embarks On Park’s Construction

“Our little town, especially the mainland area, is growing by leaps and bounds. So having somewhere else besides the beach for kids to go an...


MADE: Makers Of Important Papers

W.R. Rayson is a family-owned manufacturer and converter of disposable paper products used in the dental, medical laboratory and beauty indu...


Taking Marine Science On The Road

“My mission and my goal is to take my love of marine science, marine ecosystem and coastal ecosystems and bring that to students and teacher...

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2024 Power Breakfast: The Next Season