City deficit projected at $2.7 million
Council begins assessment based on finance research
Williamsport is deep in the financial hole due to COVID-19, officials say.
City Council is expected to tackle the financial drain the virus and other factors have taken on the city coffers.
“It is a $2.7 million shortfall,” said City Councilwoman Liz Miele, finance committee chair, after a report from the city administration.
Finance officials calculated a fund balance of $2.6 million, expecting to be $150,000 short compared to budget projections of a positive balance of $200,000.
“We are trying to put a conservative focus and start to plan out and most likely will need to revise as city moves through yellow and hopefully into the green zones,” said Joseph Pawlak, city interim finance director.
Nicholas Grimes, treasurer, said real estate is at $10 million and is typically $11 million, but said there are some hold outs of big businesses.
Councilman Adam Yoder said the finance department projects were helpful and the model is conservative.
“It highlights a bad scenario,” Yoder said. “I would challenge us to be prudent. The bottom line shows we are short and would need to manage this appropriately.”
Finance projections for remainder of 2020 based on the pandemic revealed to the finance committee this week show a challenging picture ahead for the proposed 2021 budget.
“We need to focus on the annual budget and year-to-date or expected expenditures and revenues for 2020,” Pawlak said.
Pawlak also urged caution and used assumptions on projected tax revenues such as real estate taxes and other income.
Real estate taxes are typically budgeted at returns of 92 percent of the annual levy expected, Pawlak said. The projection reduced that to 88 percent, he said.
“We expect to be over 88 percent but are conservative in our expectations,” he said.
Wage tax and local service taxes are a question, he said.
For assumptions looking at 50 percent collection from May through July of prior year collections and collecting the assumption is to collect 85 percent for the balance of the year, Pawlak said.
“A lot of people remain working from home,” he said.
Nobody in government knows what the negative impact will be on collecting business and mercantile taxes until the end of the year.
Those collections are based on gross receipts on 2020, Pawlak. Many businesses have been shut or are operating on less capacity and that must be projected into the upcoming budget, he said.
Pawlak said the city administration will need to update the model and can potentially add removed expenses and incorporate it in 2020 budget.
“We need to be proactive and not reactive,” Councilwoman Bonnie Katz said.
Miele said it will take contraction of services to accommodate what is likely to be contraction of city income.
“It is the beginning of calculations and we hope to do better by not spending $2.7 million into the hole this year,” Miele said.
While the outlook will be tough, the city has seen some cost cutting in different arenas. Miele noted a $250,000 savings in the fire department and savings in the police department.
Two of the largest cost-drivers in the city, police and fire are doing what they can to reduce costs, Miele noted.
In the fire department, the biggest savings are related to a firefighter retiring in June, which was unexpected, along with some health care projections and facility upkeep.
The bureau had planned to replace the heating and air conditioning and roof. But instead of a roof replacement it will defer and do patching to save costs, Miele said.
In the police department, the main savings is the newer officers hired for replacements of three retirees in the start of the year, including two agents and a lieutenant.
In the department, there were reductions in equipment and larger purchases. The department but plans to defer the purchasing of firearms.
Council will hold its session at 6:30 p.m. on Zoom. Access can be made by visiting the city website or going to YouTube.