Catawba County is expecting a shortfall in the millions of dollars for next year’s budget because of the COVID-19 pandemic.
The county is working out ways to handle an expected loss in revenue of as much as $6 million for next year’s budget, fiscal year 2020-21, without raising the county sales tax, County Manager Mick Berry said at Monday’s Catawba County Board of Commissioners meeting.
The county does not have a total for the 2020-21 budget yet. The 2019-20 budget was $252.6 million. A loss of $6 million in revenues would represent a little more than 2 percent of the total budget.
The budget takes effect July 1.
The loss in revenue will most likely come from a drop in sales tax revenue, property tax revenue and revenue from building services if the economic fallout of the pandemic causes people to slow building and renovations, Berry said.
The virus shouldn’t have an impact on this year’s budget, which ends in June, Berry said. The county is planning for the majority of the economic impact to fall on the county’s 2020-21 budget, Berry said. While the county is planning to cut expenses in the range of $2 million-$6 million, there are a lot of unknowns, he said.
Part of the reason its difficult to know the impact the coronavirus is having on the county’s revenue is because of the time it takes to get sales tax numbers from the N.C. Department of Revenue, Berry said. It takes two months for the county to know each month’s revenue from sales tax, so the county still doesn’t know how sales tax has been affected in March or April.
Berry described the situation like an earthquake and a resulting tsunami, with the coronavirus being the earthquake and the coming economic impact being the tsunami.
“We’re trying to measure how big is that wave going to be, when is it going to hit and how far is it going to come inland,” Berry said. “The real issue is how quickly is the economy going to come back? … The reality is none of us really know or understand what that’s going to be like.”
Berry said planning for next year’s budget was going smoothly before the coronavirus hit. Now, the county is in an unprecedented situation, he said.
“The world turned upside down and with it our budget turned upside down,” Berry said.
The county is planning for short-term economic impacts but keeping the potential for long-term fallout in mind, Berry said.
Berry laid out several ways the county can cut the budget to save money, including putting off capital projects and initiatives.
Berry suggested delaying for a year the move to have county parks open seven days a week, which would save about $255,000; moving the opening of Mountain Creek Park, which would save $67,000 in staffing costs; and delaying the Riverbend Park expansion to save $250,000.
The county is also considering decreasing the planned education budget increase from a 2.8 percent increase in funding per pupil to 2 percent per pupil, which would save $322,000, Berry said. Delaying taking out a loan for school construction projects one year could push a $3 million expense back a year, Berry said. It would include funding for the new Maiden Elementary School. Berry said the delay might be a more realistic timeline for building the school.
Commissioner Sherry Butler said she thought pushing off school construction was prudent. With coronavirus putting students in their homes using more technology, Butler said education could easily change after the pandemic is over. Virtual school and home school may see a rise in popularity, she said.
Other options to save money next year include delaying a $200,000 investment in future upgrades to the county agriculture building and waiting to put aside funds for future EMS bases, Berry said.
Commissioner Dan Hunsucker suggested using some money the county has saved up to make up for some of the budget gaps. Berry said the county has plenty of money saved up for a rainy day.
“You’re not going to get a rainier day than now,” Berry said.