City and state revenue declines from coronavirus have gotten attention lately, but don’t forget county governments.

A friend shared this outline by consultant Eddie Jones for the Association of Arkansas Counties that was distributed to county judges and treasurers:

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With CoVid 19 turning our lives upside down and causing economic turmoil county revenues will be impacted over the months ahead. Many counties will have to make adjustments in their budgets if they don’t have reserves to fall back on to make up for the decreased revenues.

It is impossible at this time to know how much revenues will be affected. We have no idea how long this pandemic will last nor the depth of its effect on our economy.

I’m going to give you some information to help guide you as your consider how your county may address revenue shortfalls.

Here is a list of things to consider:

  1. Court fines: No doubt will be reduced as many court sessions will be postponed. This source of revenue will dry up as long as the courts operate on a reduced schedule.  [Note of irony: I’ve been fielding complaints about district court judges — traffic and the like — ginning out arrest warrants for failure to appear or pay fines on minor infractions. Is this really the time to saddle the system with this, much as the money might be needed?]
  2. Property Taxes: Although this is normally a very stable source of revenue, you will want to watch this source. I’ve seen the March numbers from a good sampling of counties. Several counties reported March collections near normal; a few were up from last March; and some were lower – a few significantly lower. Real property taxes will eventually be paid because property is forfeited due to failure to pay taxes. But it may come in slower this year and depending on the depth of this pandemic more could be delinquent.
  3. County Sales Tax: Sales taxes will take a hit during this pandemic causing a recessionary economy. I cannot begin to forecast what percentage it will affect your county. Much of it will depend on the type of economy your county is built around and the length of this pandemic. You will have to gauge the type of businesses that are still operating in your county and the level of business that they are doing. There is at least one bright spot in the local tax revenue scene as opposed to the State – the local sales tax is applicable to groceries and that’s where a lot of money is being expended right now. Note: Local sales taxes are collected by the vendor in one month and remitted to the State by the 20th of the following month. The counties receives their sales tax from the State about the 25th of the following month. The county sales tax received in April will represent sales made in your county during February so should not be affected. But starting with the sales tax receipted from the State in May will represent March sales and will no doubt be a decreased amount. The sales tax collections will continue to be reduced during the course of this downturn.
  4. Highway Revenue Turnback: The normal highway turnback is funded through various fuel taxes. State officials are saying that fuel purchases may be off by as much as 50% during this economic slowdown. That percentage may be a little high but no doubt it will be significant. The road turnback funding from Amendment 91 [4-Lane Highway Construction and Improvement Bond Program] comes from a 1/2 cent state general sales tax. There is no doubt this tax will decrease significantly during this time because the state sales tax is not applicable to groceries. NoteThese taxes are collected one month and remitted to the State by the 20th of the following month. Any county share does not hit the treasury of the county until the following month. Therefore, county government should not notice a decrease in these revenues until May.
  5. General Turnback: General Turnback to counties is an appropriation made by the State of Arkansas from general revenues of the state. As you know, the Legislature met in Special Session recently to reduce the general budget of the State for this fiscal year which ends June 30 for Arkansas. [County government operates on a calendar year but the state operates on a fiscal year running from July 1 through June 30.] General Revenue Turnback was reduced like other general fund appropriations. Below are the numbers:
  • Original General Revenue Turnback Appropriation   $21,428,616.00
  • Revised General Revenue Turnback Appropriation   $20,529,517.00
  • Difference                                                                $899,099.00
  • Monthly X 4[Distributed in Apr; May, June, July]          $224,775.00

This calculates to a 12.59% reduction of the monthly general turnback for the next 4 months. Each Treasurer should multiply your normal monthly general turnback amount by 87.41% to know the amount you will receive in each of the months of April, May, June and July. [The July distribution represents June deposits to the State Treasurer.]

I’m sure there are other revenue sources that you will need to look at and possible adjust. Counties may have to make adjustments on a monthly or quarterly basis until this crisis wanes and things get back to normal or closer to normal.

County governments pick up trash, pay for jails and sheriff’s offices, operate courthouses, handle elections, regulate unincorporated areas, maintain county roads and more.

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