Siler City anticipates revenue drop due to COVID

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SILER CITY — Siler City’s board of commissioners received a grim revenue project during a virtual budget workshop on April 16 and are now asking town departments to re-work expense budgets — factoring in a COVID-19-related 20 percent decrease calculated by Finance Director Tina Stroupe

The current FY 2019-2020 budget anticipated $15.7 million in revenue, but with decreases in both sales tax and utility payments, that number for the current fiscal year is expected to be closer to $15 million, according to Stroupe. For the upcoming FY 2020-2021 year, initial estimates show the town’s revenues could be even lower — closer to $14.7 million — though Stroupe admits that this number is still “very much subject to change.”

“It’s not a great picture,” Stroupe said. “None of us knew this was coming so it’s hard to prepare.”

The reductions in revenue come mainly from two different categories of income — sales tax and utility funds — but loss of Parks and Recreation revenue from fees and suspended programs is also a concern. Stroupe explained that the League of Municipalities and the UNC School of Government, which provides guidance through projections to assist towns in their budget process, have indicated that jurisdictions in North Carolina could expect up to an average of 21 percent reduction in gross domestic product but could be as high as 24 percent for April through June 2020.

Stroupe calculated an overall decrease of 11 percent in the General Fund alone, by using indicators from the current quarter, combined with expectations from a more significant decrease in GDP in the next quarter and what she hopes will be a leveling off of in the fiscal quarters following. Stroupe said that because the projections were provided before the full impact of the closure of businesses including salons and restaurants for dine-in the town will have to look at the numbers again later before releasing its final budget to “get a better feel for where we’re at with COVID-19.”

Stroupe noted that with fewer people working, businesses reducing production and schools closed, revenue for water and sewer use is also projected to decrease. Stroupe noted that the town is already seeing an 8 percent reduction in the water-sewer utility fund with some estimates predicting as high as a 40 percent decrease. For the discussion last Thursday, Stroupe was using an estimate of a 20 percent drop saying the town “won’t have a clear picture” until later and that “what we have now is definitely going to change.”

As a result, the town’s department heads will be asked to review their requested budgets and adjust accordingly. The board has asked staff the review the 10 positions previously requested and prioritize expenditures based on concerns of a reduction in revenue. But the board did approve purchasing face masks for town employees in another meeting on Monday night.

The expected date to pass the budget will likely occur on the last meeting in June to ensure the town is working with the most updated projections. According to state law, all jurisdictions must have their budgets passed by June 30.

Casey Mann can be reached at CaseyMann@Chathamnr.com.