Tia Lynn Ivey
Madison City leaders are expecting to take a hit in revenues due to the novel coronavirus grinding the economy to a halt in recent months. The closings of non-essential businesses during the local state of emergency in Madison will lower the sales tax revenue collected by the City of Madison.
“We know it’s going to be a hit, we just don’t know how much,” said City Manager, David Nunn. “I can’t project what it’s going to do. It’s unprecedented for our economy to go in the tank over a month-and-a-half. It’s all a happy guess. We will get the numbers and we will adjust.”
Nunn explained that even though the sales of big box stores, such as Walmart and Lowe’s, are way up, the revenues from sales tax from those businesses will not balance out what would have been collected from the retail stores and other businesses that have been closed down or reduced operations.
“We don’t know if all of the panic buying and all the pushing from school lunches to Ingles or Walmart or wherever, and we know Lowes, the big box sales are double or more, but we don’t think that will make up for everything else,” explained Nunn.
According to the city’s finance director, Karen Stapp, more information is necessary to gauge the anticipated drop in sales tax revenue.
“I don’t have enough data as far as the sales tax goes,” said Stapp. Stapp noted that while sales tax revenue was up 7 percent in February, the city has not yet received the numbers for March and April, the months most affected by the coronavirus closures.
According to Stapp, The city will receive sales tax revenue for March at the end of April, and sales tax revenue for April at the end of May.
“We will have a better idea once those come in,” said Stapp.
According to Nunn, sales tax revenue affects the city’s general funds and project spending.
“It affects paving, sidewalks, and any of these special projects and building projects we want to do,” said Nunn, who said reduced revenue will result in the postponement or reduction of such projects.
“They will just get pushed out or changed in someway depending on what the affect is. We just don’t know yet.”
The city’s finance department has also been scrambling to create a new budget for the upcoming fiscal year by the June 30 deadline. Finance Director Karen Stapp presented the outline for the 2020-2021 Fiscal Year Budget adoption to the council.
“I had everything set for May, but have moved all the dates to June,” said Stapp, who had to shuffle the timeline around because of the coronavirus pandemic.
The first budget presentation to Mayor and Council will be on Friday, May 29. A budget work session will be conducted at the council’s regular meeting on Monday, June 8. A Public hearing will be held on Friday, June 19. Finally, a budget adoption vote will be done on Friday, June 26.
“That will meet the deadline,” said Stapp.