ASHLAND — The City of Ashland’s finance director is advising city leaders to take a “wait it out” approach as the state, Ashland County commissioners and some other local governments cut 2020 budgets due to COVID-19.
On Tuesday afternoon, Ohio. Gov. announced $775 million in reductions to the state’s general fund, the first year of a $69.8 billion biennial budget that must be balanced by the end of the state’s fiscal year June 30.
Ashland operates on a calendar-year budget and Finance Director Larry Paxton addressed Ashland City Council Tuesday evening with a optimistic tone and encouragement to “keep a hand on the throttle” for now.
Paxton said the city has seen a 15 percent decrease in income tax, but relatively steady revenue from regular income tax withholdings, which directly correlates to the number of local employees who remain working.
“It’s the extreme bright spot. I’m amazed by it, and I better knock on some wood over here, because it’s held its own,” Paxton said about the withholdings. “If that was not holding its own, we would have had a completely different discussion about five minutes ago. It’s about where we anticipated it.”
Paxton calls the withholdings — or the amount of local taxes withheld per paycheck — the “heartbeat” of the income tax. For the city of Ashland, he estimates it represents about 85 percent of income tax-related revenue.
According to Ashland Mayor Matt Miller, all “major employers” in Ashland County were deemed essential amid the statewide order to close non-essential businesses.
“In some instances, companies that even closed for a week or two continued to pay their employees during that time, so we’re very blessed to be in the situation we’re in,” Miller said.
Steve Workman, council president and first ward representative, summarized Paxton’s perspective as “optimistically cautious.” That description prompted Paxton’s approval.
“Our employers are still employing their employees. They’re making their withholdings, but that could change any day of the week,” Paxton said.
“From my perspective as far as the income tax is concerned, we look at it every day. Every day. And we study it. We watch, and we examine the taxes and the utilities payments and the other things the city takes in,” Paxton said.
The financial impact of COVID-19 became clear to Paxton in late March, and April wasn’t “anything to write home about,” the finance director said.
Revenue from income tax dropped in April, which Paxton attributed to the postponed filing deadline. He predicted dollars will come in closer to the revised deadline of July 15.
Utilitiy payments are down slightly, he continued, but most customers have continued their payments. Many have transitioned to online payments or use the city’s drop box to submit payments.
Further, seeing the state of Ohio and Ashland County’s intentions to react to shrinking revenues, Paxton is concerned the city of Ashland could receive less than usual from the larger governing bodies.
“There’s no doubt, if the state is shrinking their revenues, they will shrink some of our revenues we receive from them, but at this point, I prefer to keep a steady hand on the throttle and work our way through the month of May,” Paxton said.
He said he hopes to then have a more clear picture of where finances stand.
“Are we concerned? You bet, as sure as we’re sitting here,” Paxton said. “But at the same time, let’s give it a little chance to see how we make out.
“Now, I may have a whole other conversation at the next meeting. I have no idea, but… as it is right now, that’s my perspective,” the finance director said.
