GOSHEN — While still very early for any solid numbers, Goshen Mayor Jeremy Stutsman indicated Tuesday he expects the city could be facing a funding loss of $1.5 million or more this year due to the COVID-19 pandemic.

Stutsman spoke of the potential funding loss during a meeting of the Goshen City Council. The topic arose Tuesday evening after Stutsman was questioned by Councilman Doug Nisley about whether any conversations have been happening with regard to the potential impact of the virus on the city’s funding numbers.

“That’s actually been a big discussion among staff and I. We’ve reached out to (accounting firm) Baker Tilley, and also some state entities and departments, to try and get a better feel for exactly what that effect is going to be on the city budget,” Stutsman told the council. “We have some rough estimates at this time, but they’re admitting that there is a lot of information that they don’t have, and it’s a rough estimate.”

For starters, the city’s income tax and gas tax lines and funds will definitely be affected by the pandemic, Stutsman explained.

“Whatever money we don’t collect there, the city of Goshen will never see back,” he said. “We’re hearing that those funds will have some effect this year, but the biggest effect will come in 2021 and 2022 for those lines because of how the money is collected.

“They have estimated that we may see as low as a 40% collection rate for property taxes, which creates a pretty big shortfall,” Stutsman added of Baker Tilly’s estimates. “But, it’s a temporary shortfall. That money will be collected in the future as people pay off the debt of their property taxes. So, what we don’t collect initially we will see come into the city coffers later.”

Should they be needed, the city also has significant cash balances available to help cover any property tax loss the city might see due to non-collection, Stutsman explained.

“The first estimate from Baker Tilly for our budget is that we will not have 11% of our budget possibly this year,” Stutsman said. “If we were to cover that through cash balances that we have, it would take 15% of our cash balances to cover that. They’re looking at roughly $5 million.”

However, Stutsman noted the $5 million figure put forward by Baker Tilly operates on the assumption that the city will spend 100% of its budget this year — something Stutsman said is very unlikely.

“We have a long history in the city of Goshen of only spending 95% of our departments’ budgets. So, if you take out that remaining 5%, and if you take out the property tax dollars that we’ll be able to cover and that will come back to us, we’re looking at possibly a $1 to $1.5 million loss this year,” Stutsman said of how he came up with his anticipated funding loss for the year. “But, we are looking at all possible aspects of how to cut costs to make sure that we can level that out so that we don’t have to use cash balances this year, because I believe in the next couple, possibly three to four years, those cash balances are going to be pretty important for us to keep this community going the way we are now.”

As an example, Stutsman noted how he recently elected to press the pause button on the city’s much-discussed $7.9 million multi-use pavilion and ice rink project planned for construction along the city’s millrace.

“The first large project that we’ve delayed and said we’re just putting on complete hold here is obviously our skating rink,” Stutsman said. “That was a quality of life project, and still one I heavily believe in for the community and for the value that it would add to our community. But I definitely think that’s one that we need to pull back on until we know what’s going on with the budgets officially.”

COVID FUNDING

Also Tuesday, Stutsman provided a brief update on where things stand with the $500,000 additional appropriation the council recently approved as part of the city’s COVID-19 response.

“We have been using that to purchase PPE (personal protective equipment) for many of the departments that need it. We’ve been getting cleaning supplies, all those types of things that we don’t normally purchase from year to year,” Stutsman said of the funding. “The COVID-19 newsletters, we’ve been pulling money from that line for those as well. And we also purchased two more road construction digital signs to help communicate with the community. Those were signs that we have been wanting for the street department and engineering department, and just never actually did that. But because we are working so hard to communicate with everyone, we decided to go ahead and get those signs, too, to get the message out and make sure that our community knew when the stay-at-home orders were in place and when they weren’t.

“So, we’re watching those lines carefully, and definitely my intent is to return as much of that money to the General Fund as possible, so we’re only spending what we feel is absolutely necessary out of there,” he added, noting that as of Tuesday’s meeting, just more than $100,000 of the $500,000 additional appropriation had been spent on COVID-19 response efforts.
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