Coronavirus cuts into city, county budgets

Local governments across the state are preparing budgets for the next fiscal year The coronavirus outbreak is lowering their bottom lines by the week.

Posted 8:36 p.m. Apr 16, 2020 — Updated 10:57 p.m. Apr 16, 2020

Mandy Mitchell

, WRAL reporter

RALEIGH, N.C. — Local governments across the state are preparing new budgets for the fiscal year that starts July 1, but their budgeting comes at a very uncertain time.

"The one thing we know is that our revenue is going to be greatly reduced," said Durham Mayor Steve Schewel.

Most city and county governments' top source of revenue is property taxes, but with massive layoffs related to the pandemic, some people may not be able to pay this year.

Coming in at a close second is sales tax revenue. With many local businesses closed, there's no question local governments will see a big drop in money coming in.

"The county was looking at a surplus of about $30 million coming into the end of our fiscal year, and now we are looking at a potential deficit going forward of tens of millions of dollars," said Wake County Commissioner Matt Calabria.

It’s not just about sales tax, either.

Raleigh makes money from the Raleigh Convention Center, which has been closed for about a month, costing the city almost $2 million. Durham depends on similar revenue from the Durham Performing Arts Center, which the outbreak has also forced to close.

Cities also collect revenue from parking and from parks services, all of which have been closed or reduced since the outbreak began.

This creates a challenge in putting together new budgets as local leaders decide what is essential and what is not.

"In a time of uncertainty, you don’t even know what you are going to need or what you are going to have, which really creates a perfect storm of a catastrophe in the budgeting world," said Bruce McDonald, associate professor of public budgeting and financing at North Carolina State University.

"Depending on the month, we are predicting a decrease in sales tax revenues anywhere from 25 percent to 40 percent over the next several months," Calabria said. "It has become a very difficult process, not just figuring out what to cut and where, but also how much to cut."

"All of the new things we were hoping to do – so many of those new things – we are not going to be able to," Schewel said. "We are going to be trying to hold on to our employees. We are going to be trying to make sure the essential services we provide we can continue to provide."

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