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Coronavirus will chip away at Columbus budget - News - The Columbus Dispatch


Columbus city tax revenue, 78% of the city’s total general fund revenue, is in danger of dropping as economic activity grinds to a halt due to the coronavirus pandemic.

The economic fallout caused by the coronavirus pandemic will be “like a thousand paper cuts” to Columbus city government’s revenue, as small businesses and workers stop collecting pay, resulting in a drop in income-tax revenue, City Auditor Megan Kilgore said this week.

“The scenarios could be either moderately bad, or bad,” Kilgore said. “… Worse.”

Columbus might be in better shape than many other municipalities.

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The city has $84 million in its “rainy day” fund — a reserve of 9% of annual spending — plus a $20 million cushion in its basic city services fund, officials said.

The city’s largest employers, including Ohio State University, health care providers, the state, and banking and insurance firms, are largely still operating. The city’s 100 largest employers provide half of its income-tax revenue, Kilgore said.

But it’s the other half of taxpaying entities and workers — roughly 900,000 of them representing small- and mid-size businesses and their workers, independent contractors and others — where the immediate impact is not certain, Kilgore said.

In Ohio, 111,055 unemployment claims were filed from Sunday through Wednesday, according to state figures released Thursday. That was almost 29 times the 3,895 claims at the same point of last week.

In an advisory sent to Mayor Andrew J. Ginther and the City Council on Wednesday, Kilgore wrote that “the likely scenarios for the Columbus economy are not good and will require federal, state and local stimulation to rebuild businesses’ balance sheets and turn things around for our most vulnerable workers.”

In 2019, the city received 78% of its $923.7 million in general fund operating revenue from the city’s 2.5% income tax. With bars, restaurants, movie theaters and sports venues shuttered, conventions and large events canceled, airline traffic cratering, hotels emptying, and fear altering consumer behavior, there is little doubt that income-tax revenue will drop this year.

Therefore, the city is cutting back spending where it can, which, in turn, causes new ripples of contraction through the economy.

The city has instituted travel restrictions that will provide savings, but it’s too early to know the impact, said Joe Lombardi, the city’s budget director.

“Though we all are concerned about what impact the COVID-19 outbreak will have on the economy, it is premature to predict,” Lombardi said in a text message. “It may be necessary to take other measures if warranted, such as restrictions on hiring and other expenses.”

Kilgore’s memo says it is evident that the crisis will have both “top down” and “bottom up” effects on the local economy, and therefore on city revenue.

From the top down, “we anticipate declines in discretionary spending (e.g., restaurant spending, consumer purchases), shocks in the financial markets, and a dampening within our most affected industries.”

From the bottom up, it will impact “every sector of the Columbus economy with closed businesses, school closures, travel disruptions, empty restaurants, and canceled events, conferences, and tourism.”

“This is just kind of where we are right now,” Kilgore said in an interview. “The likely scenarios of the Columbus economy are not good.”

bbush@dispatch.com

@ReporterBush

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