By Linda Dillman
Staff Writer
The financial impact on the city of Canal Winchester from pandemic closures for individuals and businesses may not be known for months, if not longer, but Finance Director Amanda Jackson is preparing for an inevitable hit on city finances.
Revenue from second half property taxes, paid in arrears and only in two yearly payments from the county auditor, could be delayed this year until the fall; the Regional Income Tax Authority (RITA) is preparing municipalities for lost or delayed revenue; the community pool season was cancelled; and while the city does not rely heavily on hotel/motel bed taxes, decreases are anticipated. Income tax withholding collections are expected to take a toll.
“This is where we will see the biggest impact in 2020 as a result of the closures and stay home order,” said Jackson. “In 2021, we will feel the impact of the net profit and individual tax payments. Because of the timing of when withholding payments are due, we do not have much information on the affect the closures have had just yet. We do know that out of our top 10 year-to-date taxpayers, five have been somehow affected by the closures and stay home order.”
RITA estimates a loss of $650,000 in income taxes and a delay in the receipt of $850,000. Jackson said the lost revenue amount equates to approximately 9 percent of estimated revenue and is consistent with the projections of other central Ohio communities. Hotel/motel taxes are paid one month after collection—January taxes are due in February, etc.
“Revenue to date is down over 50 percent but is directly related to a delay in the payment of February and March taxes as agreed upon with the hotels,” said Jackson. “We will see a decrease in the revenue overall for the year due to the significant decrease in travel and the need for hotel rooms. Because we don’t rely heavily on this revenue source to fund our operations, we will be able to withstand slower collections without it having a great negative affect on our overall fund balance.”
However, bed tax revenue may directly impact how much will be available for future bed tax grants and the amount of funding provided to Destination: Canal Winchester.
Jackson said the fund balance is sufficient enough to allow the bed tax grant program to continue without taking a large hit, assuming Canal Winchester City Council does not use funds for other purposes in the next year or two.
According to Jackson, the stay home order has not impacted construction. Revenue from development and building permits has remained higher than anticipated to date.
“We do believe we will see a slow down soon as the availability of residential lots in certain subdivisions decreases and the financial effects of the stay home order start to halt those looking to build new,” said Jackson. “Unfortunately, this is difficult to put a dollar amount on, but is something we will continue to monitor.”
While a decrease in specific fund revenue is unavoidable, Jackson continues to emphasize the city is financially healthy.
“We consistently spend less than we budget and look for opportunities to maximize our dollars as best we can,” Jackson said. “These tactics have resulted in fund balances more than sufficient to withstand the loss or delay of revenue for a period of 12 to 18 months. For many years we have held off on the ‘wants’ of our project list, concentrating on those that had a more pressing need to be completed.”
The year 2020 was presented as when the city could start on their “wants” list, including the development of McGill Park.
“We still believe that we are in the right financial place to continuing moving forward with McGill Park, the renovation of the former McDorman Building, and the utility extension project for Bixby Road,” said Jackson, who noted the pace could slow to allow for cash expenditures over a longer period of time. “We are also still looking at issuing debt as a part of some of these projects which would delay some outward cash flow for a minimum of 12 months allowing us to hopefully experience at least a partial recovery from the closures and stay home order.”
