City and school budgets thrown into uncertainty from coronavirus pandemic

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SULLIVAN COUNTY, Tenn. (WJHL)- Stay at home directives are in place across the Tri-Cities region. Many business are temporarily closed. Unemployment is skyrocketing. With people not spending money, cities and counties are experiencing major sales tax revenue losses.

What does it all mean for city leaders trying to plan city and school budgets?

Leadership from Johnson City, Sullivan County, and Bristol, Tennessee say it will be a waiting game to see the ultimate impact when it comes to schools, potential employee layoffs, and any property tax raises.

However, the financial impact of the pandemic could first be visible in sidewalks and roads delayed for repairs.

“We’re stopping some street repaving, things like that,” said Johnson City Mayor Jenny Brock.

Brock said construction and capital-related projects are the main expenses being put on hold amid the pandemic.

Bristol, Tennessee City Manager Bill Sorah also said capital equipment and improvement project expenses will be reevaluated.

“From sidewalk improvements, to paving projects, to intersection improvements, to park improvements,” said Sorah.

With no guaranteed end to the economic uncertainly, city budgets may face major changes in the height of budget preparation season.

“Unfortunately, over the last couple of weeks, we’ve had to rethink every aspect of our budget preparations,” said Sorah.

Sullivan County Mayor Richard Venable said half the sales tax generated in the county goes to schools.

“The city’s budgets will be affected much more than the county budget will. [The county does not] rely on sales tax as much as the cities do. But our school system will suffer. The question will become if we’re able to meet Maintenance of Effort,” Venable said.

Mayor Brock said the Johnson City school system will hopefully be aided by federal stimulus money, but it is still too soon to tell how they will be affected.

“How they pull out of this, how they finish the school year, all those things are probably going to be added cost,” said Brock.

Brock said it could take another 30 to 60 days to see how sales tax revenue loss will affect Johnson City.

“Some sectors are doing very well. The grocery stores, the home improvement stores, I understand, are just having record sales. So they’re going to be generating a lot of sales tax,” she said. “Our smaller businesses that have closed, our restaurants, across the board, that’s where we’re going to see a real dip.”

Brock urged the public to practice social distancing and follow the safer at home directive. She said the sooner people follow health guidelines, the sooner the economy will recover.

“Our desire is to get business back as soon as possible,” said Brock. “But public health is priority. We have to do that. If everybody would pitch in and do it, I think we can get through this a lot quicker here in East Tennessee.”

The City of Kingsport sent News Channel 11 a statement on how their budget will be maintained for the remainder of the 2020 fiscal year.

Budget Statement for FY20 (ends June 30, 2020)

Amid the current COVID-19 pandemic, the City of Kingsport is managing the current budget in ways that will help maintain the budget through the end of the fiscal year.

Steps taken thus far:

1.       The city has frozen all nonessential spending.

2.       The city has frozen all vacant positions.

3.       The city is pulling in capital cash projects.

4.       The city has frozen all seasonal positions.

5.       The city has reduced use of overtime.

The city is not looking at laying off any employees.

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