Covid-19 closures forcing governments to revisit budgets

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JOHNSON CITY, Tenn. (WJHL)- Monday, town leaders in Abingdon announced government employees were laid off because of the economic impact of the COVID-19 pandemic. In all, 77 people within the recreational and tourism department will be out of a job.

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“It didn’t make financial sense for the town to continue to operate at full staff levels with those facilities being closed and with the demand lower especially considering the loss in anticipated revenues we’re going to experience,” said Town Manager Jimmy Morani. “That 35% reduction in meals and lodging taxes is approximately $1.5 million in a potential loss of revenue.”

That loss of revenue forced the city to operate on what he calls “bare essentials”.

“The citizens and the taxpayers of the community expect that we are going to continue providing essential services. That has been one thing that the Town Council has communicated to me,” said Morani.

This year’s loss will have an impact on the next few years’ budgets.

“We have had to eliminate numerous capital projects that we had planned to perform in the next fiscal year starting in July for 2021,” Morani said. “Most of those have been put on hold and have been deferred to the following year or indefinitely.”

While Abingdon became the first to announce layoffs, it likely won’t be the last. A decrease in sales tax revenue caused by the shutdown will likely mean a major impact on all levels of government.

Just across the state line, Kingsport also expecting a shortfall.

“If those facilities are not open to be able to do business, if we’re not allowed at this point in the reopening phase to have ball games…be able to rent our gyms out then naturally, we’re going to see money lost as a result to that,” said City Manager Chris McCartt in Monday’s work session.

That loss of revenue is coming from sales and hotel/motel tax deficits.

“We’re estimating right now about a $5.4 million shortfall to the general fund revenue through the remainder of this fourth quarter,” said McCartt.

This budget deficit causing cities to suspend projects and move funds around.

“We are likely going to have to go to our fund balance to finish out the year in several millions of dollars,” said Johnson City Mayor Jenny Brock.

All three cities are slimming up their budgets for fiscal year 2021 hoping to avoid a tax increase.

“The budget [City Manager Pete Peterson] is bringing us is very conservative,” said Brock. “I’ll say it’s bare-bones but it doesn’t involve a tax increase. This to us is not the time.”

Cities and towns are still waiting on the total tax revenue numbers to come in ahead of budget season, but they say they will have the opportunity to adjust the budget later in the year.

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