As Lewis County begins to reopen after the COVID-19 outbreak prompted business closures across the country, Centralia and Chehalis are analyzing and planning for the loss of revenue within city budgets.
The cities’ general funds, which pay for essential services such as police and fire department, are composed of a little more than 50 percent in sales tax.
When the COVID-19 outbreak began and businesses closed under state orders, citizens stopped spending money at local businesses causing cities to collect less in sales tax.
Jill Anderson, Chehalis city manager, said that Chehalis is estimating a 17 percent sales tax reduction. Bret Brodersen, Centralia’s financial director, said Centralia is estimating a 21 percent sales tax reduction.
Brodersen estimated that the total impact on the City of Centralia’s general fund will be about $805,000 and there will be an estimated loss in sales tax revenue of about $630,000.
“I think that we have positioned ourselves well by developing reserves which allows us to weather some of the storms. The council hasn’t taken any action to reduce the currently approved budget but they are monitoring it closely,” Brodersen said.
In Chehalis, Anderson said that they are estimating a total revenue loss of about $1 million by the end of 2020.
“From my perspective, this really highlights how important the business community is to our overall economy, to our overall quality of life,” said Anderson. “You look at the small businesses in the fabric of our community and it’s important that we have a vibrant business community to create those revenues that can, in turn, be used to provide public services.”
Anderson said that the constraints placed on auto sales have had a significant impact on the collected sales tax revenue in Chehalis.
“Auto sales represent the largest contributor to sales tax. So you take our number one revenue (sales tax) and you take our number one component to our number one revenue (auto sales) and you basically assume that it’s been dramatically reduced,” said Anderson.
Anderson said that she and Chun Saul, Chehalis’ finance director, have been looking closely at the budget to see where they can save money in order to lessen the impact of the lost revenue.
“We are trying to trim as much as we can. We want to finish Recreation Park, we are close to finishing that and Penny Playground. We want to honor the community’s commitment to those two projects so we’ll be finishing those up,” said Anderson.
In Brodersen’s COVID-19 fiscal impact report, he estimated that Centralia is looking at an $18,000 decrease in gambling tax revenue, a $10,000 loss due to canceled recreation activities, a loss of $30,000 for the cancelation of Summerfest and an estimated loss of about $85,000 in hotel/motel tax by this year’s end.
Near the start of the COVID-19 outbreak, the city decided not to terminate service for utility accounts that had past-due bills. Of the approximate 10,200 utility accounts that the city monitors — 981 accounts — about 9.6 percent — have a past due balance as of May 7, totaling about $306,880 in a collective past due balance, according to Brodersen’s financial report.
For Brodersen’s full fiscal impact report, he can be reached at BBrodersen@cityofcentralia.com.
The sales tax reports for the month of April will be available to the cities at the end of June, which will provide a bit more insight into the projected revenue losses.
“We provide services through people and more than 70 percent of the city’s budget is people and so there is not a lot of discretionary funding in the budget,” said Anderson.