Salem financial picture a bit brighter
SALEM — The funding gap is getting smaller between last year’s income tax receipts and this year’s receipts under COVID-19, according to figures through July 31.
“We’re still holding our own,” city Auditor Betty Brothers said Monday.
During a meeting in mid-July, Mayor John Berlin said this year’s income tax receipts were down an estimated $600,000 from last year’s numbers. In June, the difference was a little over $500,000.
According to Brothers, the numbers as of July 31 for total income tax receipts were $4,211,537 in 2019 and $3,748,822 in 2020 for a shortfall of $462,714 this year so far. She did, however, say “it’s positive that we’ve made up some of the difference.”
“As the year progresses, we should at least come closer to meeting last year,” she said regarding the income tax receipts.
The numbers she provided reflect the total receipts between the 1 percent and the .25 percent additional tax voters approved again for streets, alleys, sidewalks, city-owned parking lots, curbs and storm sewers. The portion for the income tax department operation is taken off the top, then the remainder is split between the general fund and then debt reduction and capital improvements.
The tax split, after the income tax department portion is removed, is currently 82.5 percent for the general fund and 17.5 percent for debt retirement and capital improvements. There has been discussion about changing the income tax split to 90-10, meaning 90 percent general fund and 10 percent debt retirement/capital improvements, but that hasn’t happened yet.
The city currently has a $1.6 million cash carryover, so there’s no question the city will be in the black at the end of the year, even with the income tax revenue down.
Brothers said her biggest concern is next year and what the income tax revenue will look like then since income tax returns reflective of this year’s income won’t be filed until next year. A lot of businesses were shut down this year due to COVID-19, so incomes of some residents will be less.
“I think it’s critical that we have a strong carryover next year,” she said.
The city received $135,512 in funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act related to the fight against COVID-19, but at this point it can only be used to reimburse expenses related to the virus, such as the cost of personal protective equipment, cleaning costs or anything done because of the coronavirus. Any cost covered by the CARES Act is money the city won’t lose out of other funds needed to cover operations.
Bottom line, Brothers said the income tax receipts are improving since the filing deadline for income tax returns has passed.