Wheeling Officials Project $500K Deficit at Fiscal Year’s End
WHEELING — The city of Wheeling is expected to see a shortfall in revenue of about a half a million dollars as the COVID-19 pandemic slams the brakes on a fiscal year that is winding down.
Looking ahead, the city’s new fiscal year that begins July 1 is expected to start off slowly in the wake of the coronavirus-related business closures that have impacted sales tax revenues.
City leaders in Wheeling are looking to stabilize the budget before the fiscal year ends on June 30 and have designed different scenarios to keep the operating budget moving forward. Those proposed models include possible furloughs and pay reductions for city employees, but City Manager Robert Herron stressed that they’ve not yet come to a point where the city will need to implement those plans.
Members of the Finance Committee of Council met virtually before Tuesday’s regular meeting of Wheeling City Council to discuss April’s financial statements and the projected financial impact COVID-19 is having on the city.
Herron said the financial statement for April was almost identical to the financial statement in April of last year. He noted, however, that the city is just starting to see revenue impacts pertaining to the pandemic.
“Right now, post-COVID-19 revenues overall are down 21%,” the city manager said. “We’ve kind of calculated that out through the end of the fiscal year, based on that scenario if it holds true. And what we anticipate as far as normal budgetary expenditures, we’re going to be about in the $500,000 deficit range for this fiscal year.”
As Herron noted during the last finance committee meeting, a $1.3 million shortfall was projected as a “worst-case scenario” for the end of this fiscal year. But as the picture becomes clearer of how COVID-19 is impacting the city’s revenues, Herron said the more likely deficit will be around $500,000, with a 21% reduction in the remaining revenues for the fiscal year.
To make up for that loss and to balance the budget come June 30, Herron said the city will have to tap into its Budget Stabilization Fund, which will have $2 million.
In terms of sales tax revenues, the city has already finished collecting for this fiscal year and has finished notably ahead, Herron said.
“For this fiscal year, we are done collecting,” the city manager explained. “We actually ended up $154,000 ahead of last year’s totals and $11,000 ahead of budget for this fiscal year. That’s good news. However, we can only speculate on current sales tax revenues because we won’t receive this quarter’s sales tax until the next fiscal year in July. But those sales tax numbers will definitely be impacted by COVID-19.”
Herron explained that each quarter, the state treasurer issues payments to the city for its sales tax revenues. They typically arrive around the 20th of the month in July, October, January and April.
“June is by far our worst revenue month of all, and historically that’s been the case for years,” Herron said. “Typically, the city receives around $1.2 million in June. To put it into perspective, in April of this year, the city received almost $4 million. We’re projecting that to be around $950,000 this year based on what is trending. So June is going to be a very weak revenue month. And that’s been taken into account in talking about the proposed $500,000 shortfall.”
Looking at ways to cut expenses in light of the pandemic-related impacts to city finances, general fund budget has very little wiggle room when it comes to items like capital improvement projects, which are almost exclusively separated out of the general fund and placed into separate accounts such as the new City Service Fee fund, Restricted Capital Improvement Program funds and other accounts.
“There’s not a whole lot of projects or purchases that we can delay or postpone, because there aren’t many included in the general fund since it is truly an operating budget,” Herron said. “We have put together some scenarios on potential furloughing and potential reduction in pay. We’re not at that point yet where I think we have to implement that, but I think we’re beginning to prepare for that in the event that we have to do it. We have various scenarios that show the impact on what those scenarios would relate to as far as savings in expenditures. But I want to stress that we’re not at that point right now.”
The city will likely be eligible for COVID-19-related relief from the state and federal government to help address fiscal issues, as well.
“Each department head has been instructed to do so, and I know for a fact that they’ve been keeping track of anything that they feel is COVID-related that we could seek reimbursement for in the event that presents itself,” Herron said, noting that the city department have been keeping notes on these items since March 13 when the impact of the pandemic began to affect the city. “We’ve been notified through the U.S. Department of Justice that we are eligible for $145,000 for the police department.”
Herron said the city also received a total of $60,000 for the police and fire departments from the Ohio County Commission as part of a distribution of funds to counties from the state of West Virginia.
“We’ll also be receiving $690,000 as part of our HUD (U.S. Department of Housing and Urban Development) allocation above and beyond our $1.2 million entitlement,” the city manager said. “There has be no guidance provided as of this morning from HUD as to what would be considered eligible COVID-19 expenses for those funds other than we will have to meet one of three national objectives for CDBG (Community Development Block Grant funding program) which is benefit low to moderate income residence, eliminate slum and blight, and job creation. Beyond that, we don’t know what the COVID-related expenses are going to be permitted.”
Herron added that Gov. Jim Justice’s office late last week opened a portal for applications for relief funding currently available from the federal government through the states.
“We’re still analyzing what we’re going to submit there,” Herron said. “As of right now, budgetary backfilling is not permitted, although we are hopeful as the governor is that that will also be available through that portal.”
The Ohio Valley Regional Transit Authority is eligible for $1.3 million in relief funding, Herron said, noting that an application has likely been submitted for that funding.
“We are keeping track, and we will be available to apply for whatever is out there,” Herron said. “Federal funds are out there floating around, and we do anticipate additional availability as we go through this over the next several weeks.”
The city will begin parking enforcement on June 1 after being on pause for two months. Officials on Tuesday said parking revenues through fines were down about $50,000, and actual parking meter revenue was down $27,000 for the month of April.
“As we’re reaching the end of the fiscal year, we’re going to need to do a budget revision,” Herron told city leaders Tuesday night, requesting that another finance committee meeting be held before the next city council meeting on June 2 so budget revisions can be made and submitted to the state by the deadline in mid-June.