City anticipates tough financial year in 2021

Although the city of Vermilion will tweak its budget for the next seven months to break even financially by year’s end, city officials say Vermilion will brace for a financial storm in 2021.

Finance director Amy Hendricks said during a May 4 City Council meeting that the city is estimated to lose 20 percent of income tax revenue over a two-year period due to the impact of the novel coronavirus.

However, Hendricks said it’s currently difficult to anticipate just how hard the city will be hit, since tax filing deadlines were pushed back into the summer.

“We really are anticipating that we are going to have some significant impact on our revenue,” she said. “It will be very difficult this current year to anticipate what those are going to be with any great degree of accuracy until it’s almost too late to make adjustments.”

For 2020, the city will be cushioned by $2.2 million of carryover in the general fund, which will help Vermilion break even for the year, Hendricks said.

The city had anticipated to have a carryover of about $475,000 at the end of 2020, she said.

For the second half of 2019, Hendricks said the city anticipates a loss of $450,000 in income taxes and $570,000 for the year in interest income and other fees.

Additionally, $527,000 is expected to be lost in 2020 filings for 2021, she said.

Mayor Jim Forthofer said to keep these revenue shortfalls from pulling the city into the red, cutting expenses when possible is important.

“This year, if we suck in our guts and pay attention to some real serious cost reductions, it looks like we may break even this year,” Forthofer said. “We may end solid.”

Even with these cuts, Forthofer said 2021 still looks difficult financially.

“Next year is going to be very uncomfortable,” he said.

In other news

Forthofer said the city is planning to have all city employees currently working from home back in City Hall around June 1.

Once the employees are back in the office, the city will take the necessary next steps to open the building to the public, he said.

“There’s a lot more that goes into it than throwing open the doors,” Forthofer

said. “There’s safety precautions that have to be made.”

After hearing recommendations from Lorain County health commissioner Dave Covell, the mayor said the city will have to deliberate extensively on whether recreational facilities, like the community pool, should open.

“The type of restrictions that he suggested on municipal pools really make you think twice about whether you want to do it or not,” Forthofer said.