Sales tax receipts lag three months, so the collection reflects what people spent money on in June. Officials credit the one-time federal stimulus money and extra $600 per week unemployment stipend that has expired for the nearly normal spending habits.
Professor Michael Jones, academic director for the Economics Department at the University of Cincinnati, said there is a group of economists at Harvard University tracking consumer spending. There was about a 30% percent drop in spending during the first few weeks of the pandemic, but things improved rather quickly, and spending was down 4.7% in Ohio in August.
“This was kind of the first recession we planned for, that we actually created, we told people to stay home, we said if you’re in retail, if you’re at a restaurant, don’t come to work,” Jones said. “If those plans had continued you would see that continual, steep decline in spending. But two things happened, we did open up relatively quickly so that bounce back did come back with in Ohio, but two we also paid those individuals who were furloughed or let go.”
He said government officials can be happy their worst fears haven’t been realized so far, but there is a new wave of unemployment likely on the horizon.
“You’ll start to see, GE aircraft engines has laid off significant amounts of employees and these are higher-income individuals," Jones said. “These higher-income individuals who can work from home, they’re starting to feel the effect now. So there’s a bit of a lag in when some of these COVID economic impacts are going to take place.”
County Administrator Judi Boyko initially estimated a $20 million general fund drop this year, including a 10% reduction in property tax collections, the second-highest revenue source. Butler County Treasurer Nancy Nix said the second-half property tax collections generated 96.2% of the amount billed compared to 96.1% for the second half last year.
Nix tempered the positive collection news, saying many of these payments were escrowed or mortgage companies covered shortfalls.
“We attribute a big part of this high collection percentage as a result of federal government programs designed to lessen the impact to taxpayers," Nix said previously. "While we’re happy with this collection, we still feel there could be problems down the road.”
Boyko said through August “most of the primary revenue sources are tracking consistently with same period over 2019.” Casino taxes have dropped the most at 33.3%. The tax budget calls for $3.2 million in that revenue line item.
The 2021 budget submissions were due from the various office holders and department heads last Friday. Boyko said nearly all of them are in. Everyone was asked to cut 3.3% from the adjusted budgets for this year, which were cut 4.14%. It is too early to tell the compliance rate.
The commissioners will hold budget hearings next month. Commissioner Don Dixon said regardless of the positive revenue picture now, they must prepare to an uncertain future.
“You can either be conservative and prepared or you can go out to edge and hopefully you don’t fall off,” Dixon said. “We’re on the conservative side and I think our office holders are all on the same page and our employees know we try and give them the real facts. I think we’ve been doing pretty well as a unit, so we’re going to continue down that road and see how the rest of the world turns out.”
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