Officials prepare for COVID-19
 impacts on budgets

Edison Hatter

Likewise, the total daily number of those hospitalized in Maryland with COVID-19 stayed under 500 for most of the month of August, well below the peak of 1,700 that were hospitalized at one time in late April and early May. Despite the positive trends being seen now, the COVID-19 pandemic is not over yet as Maryland remains in phase two of the reopening plan for the foreseeable future.

While the health and safety of all people remains a high priority, significant focus has shifted towards the short- and long-term economic impacts of the COVID-19 pandemic as well. At the county level, one of the big concerns going forward will be the impact of less tax dollars being received this year, as well as the later tax filing deadline of July 15.

According to Frederick County Executive Jan Gardner, all counties in the state of Maryland receive income tax payments from the state each month. However, Gardner noted that the distribution of payments is not evenly dispersed over the year; the largest payments usually occur in February and November. While Frederick County did see a reduction in anticipated income tax revenue payments from the state in June and July, Gardner said it is difficult at this time to determine exactly how the later tax filing date this year may have affected these payments. Gardner concluded by saying that, "we will likely not be able to fully assess the impact of the tax payment deferral and the impact of the economic downturn until the end of September."

Similarly, the local governments in Thurmont and Emmitsburg are trying to understand what repercussions the COVID-19 pandemic will have on their financial situations. According to Linda Joyce, the Chief Financial Officer for the Town of Thurmont, the town receives local income tax distributions from the state of Maryland based upon projections for state income tax withholding and estimated payments due each year.

Due to the later filing deadline and the COVID-19 pandemic, Joyce said that the state anticipates a 13 percent decrease this year from last year’s distributions. The business shutdowns, job losses, and work week reductions are expected to result in lower income tax receipts both this fiscal year and next fiscal year. According to Joyce, "projecting income tax revenues is difficult in the best of years and will be more so at this time."

Additionally, a property tax revenue decrease is expected as a result of job losses and work hour reductions. The town of Thurmont is also expecting possible increases in property tax delinquencies, property abandonments, and foreclosures. According to Joyce, there is a strong possibility that some businesses may not survive the temporary shutdown and that many more will experience lost business as a result of the pandemic. Furthermore, closed businesses do not generate Admissions and Amusement Tax Revenues.

Ultimately, the tax revenues decrease affects the operating budget of the town of Thurmont. "Local governments have balanced budget requirements," Joyce said, "meaning that declines in tax revenues, if not offset by increases in some type of federal funding, must be met by spending cuts or tax and fee increases." Nonetheless, Joyce, like Frederick County leadership, admits that the uncertainty surrounding the entire situation. Joyce cautioned that "the actual full impact of the COVID-19 pandemic on state distributions will not be known until the emergency is over."

Emmitsburg Mayor Don Briggs said that although the town budget for 2020-2021 was approved in June, there will be a six-month review in December for the first time in recent history. "Logistically it has been difficult," Briggs commented, "our office is located in a County-owned building so our office along with the building are still closed. We are rotating staff to keep them safe."

However, on the positive side, Briggs said that tourism is down, but is coming back. Furthermore, restaurants in town with carry out businesses have rebounded quickly. While Briggs said he believes overall that the town is still in a reactionary phase to the pandemic, he does believe the town has "counter punched" in many ways. He says the goal is to be flexible to stay ahead of the virus as possible future waves hit the area.

Across the state line, there is similar uncertainty about the long-term impact of the virus. According to Randy Phiel, Chairman of the Adams County Commissioners, the COVID-19 pandemic will obviously have an impact on county revenues. However, Phiel expressed optimism that Adams County is in a position to withstand the situation in the short-term. "COVID-19 has resulted in some reduced operating expenses and some increased operating expenses," Phiel said, "so it remains to be seen how those will balance out. Potential reimbursements may also play some role on the bottom line. Our County Financial Team is working diligently and pro-actively to evaluate our current and future fiscal situation."

As with other local governments, the Borough of Carroll Valley will not know the full impact of COVID-19 until after the budget process is complete. According to Mayor Ron Harris, this process is underway now and will continue through December; it will include gathering and analyzing the yearly budget revenue and expenditures to date and comparing the results to the initial estimates. The results of this comparison will determine how reasonable the estimate for the rest of the 2020 year and the beginning of 2021 are. The draft budget for the year will next go the Financial Committee for review and ultimately be presented to the Council. After a joint meeting between the Financial Committee and the Council, the budget will be available for public comment before being getting the final stamp of approval from the Council.

In addition to county and local governments, Volunteer Fire Departments have also felt significant affects from the COVID-19 pandemic, according to Sarah Ginn of the Fountaindale Volunteer Fire Department. "We have lost many opportunities to fundraise since March," Ginn said, "we have had to come up with other ways to raise funds, such as drive-thru dinner events and online ticket sales to comply with governmental restrictions." Nonetheless, Ginn said that community support has been amazing and appreciated during the uncertain times. Ginn says that support for Volunteer Fire Departments is needed now more than ever.