Outbreak throws chaos into city, county budgets

BY CHUCK VANDENBERG
PCC EDITOR

FORT MADISON – City and county officials are going back to the drawing board as the fiscal year comes to an end facing deflated revenue numbers.

Fort Madison City Manager David Varley said he knows the city’s going to take a big hit, but he can’t get his arms around just how big it will be.

“It’s gonna hit us hard, and there are some big unknowns out there,” he said. “I can’t put a number on it and define it.”

There are several economic factors in play as the state’s reaction to the coronavirus has forced the closure of many small businesses, including restaurants and bars. Some businesses are still open as essential, like hardware stores and convenience stores, but spending is clearly down as people stay at home to avoid the virus that is sweeping the nation.

Varley said the federal and state agencies aren’t providing much direction or assistance to municipalities and local governments.

“I haven’t received anything from the state other than they’re telling people they don’t have to worry about paying tax bills or water bills, and that’s only information that is negative or harmful to us,” Varley said.

“I haven’t received anything as far as direction as to what the size of hit we’re gonna take.”

Varley said he’s pouring through revenue categories of the budget and trying to adjust where the city will land at the end of the fiscal year on June 30.

Lee County Supervisor Ron Fedler said Tuesday that he was informed late yesterday that the county will take a $100,000 projected hit on gas consumption tax for a three-month period.

Fedler said due to that information, the county will put off building an addition to the maintenance shop in West Point.

The addition was budgeted at $180,000 so that gives the county an extra $80,000 cushion this year in case other revenues fall short.

Lee County Budget Director Cindy Renstrom said the biggest hit for the county will probably come from sales tax decreases, but she can’t put a figure on it. Because the state formula for dispersing the revenues is convoluted, it’s hard to predict.

She said online sales probably won’t make up the difference because online companies aren’t even mandated yet to make those payments, so that revenue stream is difficult to gauge as well.

“Not knowing how state calculates it, I wouldn’t be able to put a dollar figure on it,” Renstrom said. “We’re still getting property taxes in, but I think probably the biggest thing will be the sales tax.”

She said that not only are people traveling less, but the price of gas has gone down dramatically, which is adding to the tax payment reduction.

Fedler said he didn’t want to cut any road services or other maintenance projects making the construction the first thing to get cut.

“I’ve been trying for eight years to get that addition put on so we can keep our equipment in better condition,” Fedler said.

“We’re sitting good as far as keeping our roads maintained and we are doing this to make sure we have priorities right. We can live without another building for now, but can’t sacrifice our roads.”

He said when things get back to normal, the county will have to adjust its budget accordingly.

“When the money starts flowing again hopefully it won’t be that bad, but if it is we’ll handle it one step at a time.”

Varley said he doesn’t see the city making up what they are losing when businesses are able to open back up again. He also said he thinks people will use the relief checks to pay rent or mortgage or credit card bills and not as much in the way of consumer spending.

“It’s a guessing game. I can’t take the numbers we had projected and leave the same. We know that’s not going to happen,” Varley said.

“It will have an impact, but how much?” And it’s going to carry over into the next fiscal year even if things do get back to normal fairly soon.”

He said he has concern that some businesses may not get back open.

“I hope all of them can get back on their feet. Let’s face it, some small businesses can only go a couple weeks being closed or having low sales like this.”

He said the City Council will be facing some very difficult choices, with all options again on the table.

“This will make life very difficult for us and force Council to make some difficult choices and make cuts. Depending on how long this lasts we could be back to looking at everything.”

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