Abrupt drops of sales and fuel taxes, and delays in spring property tax payments will force Scott County Supervisors to rely more heavily on reserves and delay planned discussions on jail and juvenile detention expansion. County budget director David Farmer calculated about $1.8 million in lost revenue so far. That includes:
• $690,000 in sales tax, which is about half of what the county was counting on for the past three months;
• $684,673 in lost conservation department revenue from camping, golf and other fees lost since pandemic restrictions were imposed;
• $200,000 in lost investment revenue as interest rates continue to drop.
Farmer also calculated $120,000 reduction in road use taxes derived from gas sales, and $144,000 in direct casino tax payments to the county so far.
Another factor is delayed property taxes. The governor extended spring property tax deadlines until April 30, slowing collections at a time county coffers typically are low.
“We’re about 93 percent collected. But that remaining is $3-4 million,” Farmer said.
Those delays also threaten mental health services, paid for primarily by property taxes.
Although Farmer still expects that property tax revenue eventually, the delay threatens to bring the county’s fund balance to 11 percent.
Board policy requires maintaining at least a 15-percent fund balance. Farmer said the county has maintained a 20-percent unassigned fund balance – or general fund reserve.
Supervisors already tapped some of that to balance this year’s budget since county expenses already were exceeding revenues.
Supervisor John Maxwell said the county eventually will get most of that property tax. “At least we know it’s coming in. Unlike sales taxes. That’s gone forever,” he said.
Farmer said a portion of Scott County’s sales tax revenue is dedicated to keeping property taxes low. “That sales tax is to reduce property tax support. If that sales tax evaporates, that’s $600,000 or $700,000 we won’t recoup in the future ...”
Supervisor Ken Beck said property tax delays might just be the start of a bigger problem.
“I’m not as optimistic as John is. If this continues and the economy does not come back for people to work, I’m concerned we might start seeing some defaults. The last thing that’s going to get paid is taxes,” he said.
Beck also warned that statewide pressures might cause the legislature to reduce or eliminate backfill funding promised five years ago when lawmakers dramatically cut local commercial property taxes.
“Depletion of backfill would cut into our fund balance at $1.5 million,” Beck said. “I’m a little bit concerned going into fall that we need to be a little bit careful.”
Supervisor Brinson Kinzer said the time for austerity is now.
“We’re going to have to prioritize things; if we do it sooner than later, we’ll have a better handle on it. Just say ‘no’ right now for expenditures,” he said.
Kinzer already parted ranks with supervisors by casting the lone “no” vote last month on a $380,000 land purchase, possibly for a new juvenile detention center.
Farmer identified $670,873 in expense reductions, largely due to fewer seasonal hires in the parks, less professional travel and fewer jail inmates.
So far, the county has spent $33,068 on COVID-19 responses, mostly for equipment that allows some staff to work from home, he said.
He said Scott County Emergency Management Association so far has spent $155,247 from its own budget. Farmer said much of that covered facemasks and protective gowns, to distribute to local community, and likely will be reimbursed by FEMA.
Farmer said federal aid from Congress’ $2 trillion CARES act is accessible only by the state of Iowa. The law limits applicants to counties and cities of 500,000 or greater. “Most grants are about pandemic response costs, not costs to the economy,” he said.