County considers budget adjustments to meet reduced revenue

The Garland County Quorum Court Finance Committee will consider an ordinance Monday night reducing this year’s general fund appropriations by $701,404, an adjustment required by the coronavirus-inspired economic downturn.

The ordinance proposes moving salaries to other funds and forgoing capital expenses budgeted for 2020. The committee will teleconference and not meet in person, County Judge Darryl Mahoney said.

The 0.50% countywide sales tax is the general fund’s primary revenue source, generating almost $10 million last year that also benefited the county’s solid waste fund. A 0.375% sales tax funds the Garland County Detention Center, and state taxes on fuel sales, along with a 0.50% state sales tax for highway construction, supports the road fund.

“When we start to see sales tax decreases, it certainly opens your eyes to what all is going to be negatively affected,” Mahoney said Friday.

The ordinance transfers $342,375 in salaries from the tax collector’s general fund-supported budget to the office’s automation fund, which receives revenue from commissions charged to taxing entities. Salaries totaling $133,651

in the treasurer’s office would also be transferred to its automation fund, and $38,768 in county clerk’s office salaries would be moved to the office’s cost fund.

The ordinance defers the purchase of four of the five vehicles budgeted for the sheriff’s department this year, a $178,609 capital reduction. The adjustments would reduce the general fund’s appropriation rate from 85.68% to 82.48% of projected 2020 revenue, according to information provided by the county finance department.

The law prohibits general and restricted funds from being appropriated beyond 90% of annual projected revenue. The 2020 budget the quorum court adopted last year projected $21.7 million in general fund revenue.

The ordinance includes removing $149,070 in capital expenses from the road fund’s budget, reducing its appropriation rate from 77.43% to 75.70%, and $374,385 in capital from the solid waste fund’s budget, reducing its spending percentage from 64.86% to 62.23%. Items proposed for deletion include a vehicle for the road department and two transport trucks for the landfill.

Mahoney said the state told the county to expect a 12.75% reduction in general fund turnback money for the fiscal year ending June 30 and a 15% reduction for the fiscal year beginning July

1. The state provides counties turnback money for administering state services, such as court operations, at the county level.

State levied fuel taxes that support county turnback funds for paving are also expected to dip, Mahoney said, explaining that the Arkansas Department of Transportation estimated a

40% reduction in travel since the pandemic hit.

A decline in the 0.50% state sales tax for highway construction that provides turnback money for the road department is also expected. The drop is expected to be steeper than those of other sales tax collections, as the highway tax isn’t levied on groceries.

Mahoney said the April deposit of the county’s share of the tax levied on Oaklawn Racing

Casino Resort’s net gaming receipts was half of the previous month’s deposit. The April deposit doesn’t reflect activity since the casino’s closure in March.

Mahoney said the 60-day lag between businesses collecting sales taxes and the state revenue agency remitting monthly collections to the county complicates revenue projections. The county won’t receive March’s collections until later this month and April’s collections until late June.

“We were very conservative in our budgeting last year, but at this time we don’t know a couple of things,” Mahoney said. “We don’t know what the reduction will be in our sales tax collections. We don’t know how long to expect that reduction.

“If it’s from mid-March to mid-June that we have to go through somewhat of a reduction and things pick back up near normal after that, we’ll be fine. But if it should string along, and the recovery efforts not work until November and December, we’ll have to look at other options. We’re preparing for the worst and praying for the best.”