Parkersburg finance director projects decrease in revenue
PARKERSBURG — As Parkersburg tries to get ahead of expected revenue losses caused by the pandemic, Finance Director Eric Jiles this week explained how he arrived at the proposed budget reductions approved by City Council.
“What our goal was is to get that budget to a point where we can feel comfortable expending dollars, providing services and such, without feeling as though it may come back at us at a later time,” Jiles said Friday.
The city’s two largest revenue streams are the Business and Occupation Tax and the municipal sales tax, which generate $8.3 million and just under $6 million, respectively. Collected quarterly, receipts so far reflect little of the period since Gov. Jim Justice issued a stay-at-home order that has since been relaxed.
B&O tax collections through March were mostly on budget because of numbers that were ahead of budget in the first and second quarters, Jiles said. B&O receipts for the third quarter are down around $300,000, he said.
Jiles projected a reduction of 50 percent for B&O revenue from retail and restaurants, a potential loss of nearly $319,000. Fifty percent reductions were also applied to the service and other businesses category ($342,663) and rents/royalties ($86,201).
Those three categories would qualify for a proposed fourth-quarter B&O exemption on the first $500 owed, which council approved on first reading Tuesday. If it passes on final reading June 2, the ordinance is expected to result in zero tax liability for nearly 1,500 small businesses. It would also add about $200,000 to the city’s decrease in B&O revenue.
The contractor and banking/financial categories were projected with losses of just 15 percent, which Jiles said was a conservative estimate since they have not been hit as hard as other sectors.
Sales tax revenue is collected by the state and sent to the city a month in arrears. So while it was on track with budget figures through the third quarter, the latest receipts only went through February. The next payment will be for March to May.
“Those months are very heavily into the emergency,” Jiles said.
A loss of $363,696, or 28 percent, is predicted for sales tax revenue in the fourth quarter. Jiles said it is less than the retail B&O decrease because sales tax also is applied to online sales.
Also collected quarterly, user fee revenue was slightly down in the third quarter, but is expected to decrease more in the fourth because of layoffs and unemployment increases, Jiles said.
Some user fee revenue may decrease because people are working from home. If their home is outside the city limits and they don’t report to their workplace in the city, there is no user fee liability for them.
Jiles set the user fee reduction estimate at 40 percent, or $219,612. Among approved revisions is a transfer of that same amount from the general fund back into the user fee fund so the city does not have to reduce its $1,391,000 appropriation for street repairs.
Some changes are being seen in revenue sources collected monthly, such as fees for city services, Jiles said.
Fire protection fee revenue is projected to drop by $103,378, with the police fee losing $56,163 and sanitation $72,168.
Property tax collections were up from July to February, but down in March and April, Jiles said. The revised estimate for revenue from those taxes is now $60,000 less than the original projection of $3,708,444.
Overall the budget reductions combined for a decrease of more than $1.8 million in the general fund. Council approved $747,952 in spending reductions and a $1,065,389 transfer in from the stabilization fund to balance the amended budget.
“We’re hoping that revenue will come in a little bit higher with expenses coming in a little bit lower, that way we can start out the next fiscal year … at the same position that we projected when we built the budget,” Jiles said.
If the budget carryover is less than the projected $500,000, the amount would have to be cut from the 2020-21 budget. That in turn could create additional demand on the stabilization fund, Jiles said.
Evan Bevins can be reached at email@example.com.