LIMA — 38 jobs and $2.8 million.
Those are the first concrete numbers on the expected losses to the city budget caused by the coronavirus’s economic fallout. They were delived Monday night to Lima City Council by Finance Director Steve Cleaves.
So far, the city has contracted its payroll by 38 jobs by offering early retirement packages.The city’s cash balance is expected to decrease by $2.8 million from its $7.6 million total.
“That’s basically if the federal programs that we are currently benefiting from continue at the current level,” Cleaves said.
Cleaves based his best estimates on a 10% reduction of revenues he pulled from an analysis of the city’s monthly revenues. Prior to the coronavirus, the city had been on track for a 9 to 10% increase over last year’s total income, but when the state entered lock-down in March, the local economy contracted sharply. Now, a year to year comparison shows a 6% decrease, and Cleaves doesn’t expect the income to rise without significant action taken on the federal level.
He offered four critical unknowns that could change current trend lines: the status of the Payroll Protection Program, Covid-19 funding rules and regulations, additional aid to local governments, and the status of the virus.
As an example, Cleaves pulled numbers from the government’s reporting on the Payroll Protection Program. According to government filings, just under 12,000 jobs, or about one-fourth of the total jobs in Allen County, had been retained as a direct result of the program, and whether those jobs will stay retained depends on many uncertain variables that may not be resolved until after November.
Cleaves also too a look at where those jobs have been most retained by comparing the incomes levels of different revenue sources. He found that incomes from W-2 filings have been relatively stable most likely due to PPP loans, yet those income taxes paid to the city by general contractors have decreased by one-fifth compared to last year, which Cleaves said was evidence that those hurting the most during the pandemic have been low-income workers.
Depending on the coronavirus pandemic and the government’s reaction to it, Cleaves said there may be additional decreases down the line. A worst case scenario estimates that the city’s emergency cash balance would be reduced by two thirds in just one year, and the city payrolls would have to be reduced via layoffs.
“That’s where we stand and that’s what we’re facing going forward. We’re lucky to have $7-plus million in the bank come January,” Cleaves said. “But if the federal government doesn’t come through with something, we will be in a layoff situation next year.”
Reach Josh Ellerbrock at 567-242-0398.