Skip to content

How will COVID-19 impact county budget?

By Greg Bird

The COVID-19 outbreak has had an immediate and often disastrous impact on local businesses and the economy, but it remains to be seen what lasting effects it will have on county finances.
With just under two months left in the current fiscal year, County Judge Executive Jimmie Greene said the current budget should remain intact, but as his administration begins preparing the next fiscal year’s budget there are questions on where the money will come from to maintain county operations in the future.
The real concern for County officials will be as they prepare the budget for the coming fiscal year.
While still waiting on concrete numbers and forecasts, there are strong indications that funding from several outside sources may be dramatically reduced or eliminated altogether – forcing a close examination of the budget to see where cuts can be made.
Due to the drop in oil prices, revenue from the state gas tax is expected to drastically drop. That tax is one of the main sources of funding for county road departments. Preliminary expectations put the cut in funding from the state down at least 20-percent for the next year.
Such a reduction would severely limit road projects for the year, and may prompt reductions on maintenance and other projects.
The Road Fund is separate from the General Fund Budget, so that lack of funding would not have an impact on the majority of day-to-day operations of the county. But, potential reductions from other areas will be felt as well.
Greene said he has not heard any definitive numbers, but in speaking with other Judge Executives from other counties, he has learned that Coal Severance funding, about $26,000 annually to the county will likely be cut this year and possibly beyond. Payments in Lieu of Taxes, the funding the county gets from the federal government for the non-taxable land in the county, could be cut or eliminated this year as well. Those payments amount to about $240,000 annually.
Judge Greene noted that there are reports that the Administrative Office of the Courts would be reducing payments to counties in “rent” for use of court facilities, but said he has been told it would not affect McCreary County. The AOC paid about $107,000 to the county in usage fees in 2019.
Outside of federal and state funding, the County primarily generates revenue through property taxes and the occupational tax. About $330,000 is collected annually in property taxes, and that fund should not change, unless the Fiscal Court opts to raise taxes this year.
The Occupational tax, which generates about $1 million for the General Fund and $500,000 for the Jail Fund annually could see a decline due to the COVID-19 outbreak.
Through March numbers remain consistent to previous years, but it may not be until July until the full impact is felt as businesses submit their quarterly reports. The payroll portion of the tax should see a slight decrease, but the largest county employers, the school district, OVC, and government entities have maintained their normal operations for the most part. It would be the smaller employers and independent businesses that could report lower payroll and profits due to the prolonged shut down. While the profit portion of the tax contributes much less to the overall collection, the impact will assuredly be felt.
Though some expenses, such as utilities have decreased due to lack of usage, the County government has been operating pretty much as normal during the crisis to provide needed services to the community.

Additionally jail expenses have fallen due to a greatly reduced number of inmates being incarcerated throughout the crisis. It will be interesting to see how the numbers grow after the restrictions have been lifted, and Court activities return to normal.
Greene said he has not furloughed any county employees during the crisis, but has allowed some employees the option to work from home.


Leave a Comment