‘Great uncertainty’: York County budget proposes cuts, protects your wallet
.jpg "York County Council members will discuss how and when they offer economic incentives to attract business.")
There’s no getting around the COVID-19 impact on York County finances. Some will feel it more than others.
“It’s already started out as a very unusual year for us,” said County Manager David Hudspeth. “There continues to be great uncertainty.”
Hudspeth joined York County Council and other officials Monday night for a virtual budget workshop. The meeting was held online due to coronavirus and social distancing concerns.
No tax increase
Council spent considerable time Monday night talking about fire funding, recycling, recreation and other topics.
The current proposal uses about $3 million in fund balance to maintain services for taxpayers. The county remains on track to pay off construction debt by 2024. The proposed budget doesn’t show a general fund millage increase, or tax increase.
“Fiscal year ‘20-’21 will be a bare bones budget,” Hudspeth said.
Britt Blackwell said it’s important for his fellow council members to remember county residents also face financial hardship from coronavirus.
“Certainly this is not the time to be raising taxes,” he said.
Blackwell brought up the idea of a county loan program for small businesses, similar to the federal program. It’s something Councilman Robert Winkler said he’s discussed with council members in neighboring jurisdictions.
“That would be a great thing to do for our small businesses,” Blackwell said.
Assistant county manager and treasurer Kevin Madden said measures like temporary tax reduction or a small business loan program either aren’t possible or would be difficult, and could hurt the county credit rating. The loan program would be difficult, but possible, he said.
“That is not something we’re in the business to do,” Madden said.
Hospitality tax debate
Coronavirus has caused one key concern.
“We also will see unprecedented decline in our hospitality tax revenue,” Hudspeth said.
Hospitality tax is a charge on prepared food and drinks. Overwhelmingly, restaurants charge it. Those funds go to projects that promote tourism. For more than a month restaurants have been delivery or pick-up only due to COVID-19. Dining rooms have been empty. Outdoor seating with social distancing returned just this week.
Madden said the hospitality tax income projection pre-coronavirus was about $3 million. Now the projection is $1 million. Funding for the county-owned Riverbend park site development and Visit York County, which promotes tourism in county, could use up almost all accumulated hospitality tax reserves.
“I have concerns about that $1 million being something we can meet,” Madden said.
Councilwoman Allison Love said she doesn’t support use of hospitality tax reserves for the tourism group.
She and others also expect hospitality tax funds to be down.
“Those numbers are going to be drastically reduced,” she said.
There was discussion Monday night about cutting funds to Visit York County. County management also recommends foregoing separate hospitality tax spending on marketing and advertising. That money is traditionally used to promote area festivals, events and arts or tourism organizations.
Council Chairman Michael Johnson said he doesn’t want to end funding for Visit York County through hospitality tax, but there could be some funding adjustments.
If large planned events aren’t happening, for instance, money that would’ve gone to support them may not be needed.
“Then (Visit York County) shouldn’t need as large a budget,” Johnson said.
County management does still recommend funding the group through accommodations taxes, charged on overnight stays. Madden said hotel stay revenue was strong the most recent fiscal year.
“Of course they did fall off dramatically when the virus came,” he said.
Billy Dunlap, Visit York County chief executive officer, said reduced hospitality and accommodations tax revenue would hurt his group. Even without a coronavirus impact, the $300,000 from hospitality tax that had been discussed for the coming year is half the funding from the current fiscal year and a third what it was last fiscal year.
“Those changes were made because of the (Riverbend) land purchase,” Dunlap said. “If we don’t get the $300,000 from Htax that we were slated to get this coming year, that will devastate our budget.”
Dunlap said his group had made expense cuts prior to coronavirus in anticipation of the reduced hospitality tax revenue.
The county bought the 1,900-acre Riverbend property on the Catawba River in late 2018. The $21 million purchase committed a mix of funding, including more than half of projected hospitality tax revenues.
Winkler said the reason he voted against that plan was the money it would tie up. Winkler said he doesn’t want to punish the tourism agency.
“We were basically taking everything to pay for (Riverbend) and not leaving any contingencies if something happens,” Winkler said.
Money available
Visit York County gets some money from each municipality in the county, and from its destination marketing fee program which should remain flat for the coming fiscal year. The challenge, Dunlap said, is that money for and from promotion work together.
“More funding equals more events and more marketing to bring visitors to York County,” he said. “Those things equal more Htax and more Atax. Without that funding and investment means less events and less marketing which also equals less Htax and Atax revenue.”
Council will have another budget workshop next week. Council members will invite Visit York County and perhaps other agencies that often receive hospitality tax funds to talk budgets.
First reading on the county fiscal year 2021 budget passed April 20. It takes three readings for final approval.
Hudspeth said the county has a good understanding of the short-term impacts of social distancing.
“We just don’t know how the economy is going to react, how long this is going to last,” he said.
The budget now accounts for worst case scenarios, he said. Income from building permits, inspection fees and deed stamps vary greatly depending on the economy. Hudspeth said budgets have been trimmed to offset expected losses. There are few new positions proposed, and any vacancies that arise will be scrutinized up to the county manager level before they are filled. Travel and training are reduced.
Still, county leaders say they are in strong position to weather the ongoing financial strains even if they last for some time.
“Our fund balance is in place for times just like this,” Hudspeth said.
