Fairhope expecting coronavirus tax hit

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FAIRHOPE – With businesses closed or slowing down during the coronavirus outbreak, Fairhope officials are cutting back on city spending in anticipation of a loss of sales tax revenue.

Mayor Karin Wilson said the city is looking at postponing more than $2.55 million in spending. She said city officials have been going over the 2020 budget to see what purchases can be put off.

“All last week I met with all the directors and went through line by line,” Wilson said at the March 23 City Council meeting.

She said any spending that depends on tax revenue needs to be examined.

“Unless they’ve been budgeted with RESTORE funds, impact fees or a grant, we’ve got to plan on not having the revenue that we were going to have,” Wilson said. “Unless this is something supercritical, I’m not talking about cutting, I’m talking about postponing and I think it’s the only prudent thing to do right now.”

Council President Jack Burrell asked Kim Creech, city financial director, to look at sales tax revenue from 2019 and determine how much money could be lost if that income drops.

“We have sales tax projections for the year right now. Take them and cut them in half and then take them and cut them by whatever, 20, 40, 60, 80 percent, and it’s just a guess, but it’ll tell us,” Burrell said. “Let’s say we said sales tax is only going to be half of projections. Then we can say, all right, our total revenue is going to be this, we ought to look at slashing this. That’s one way to do it until we have hard data.”

Spending reductions include $800,000 in the Electric Department and more that $356,000 in the Water Department. The Fire Department will postpone upgrading equipment in an effort to cut $331,000, while the Police Department is looking at reducing spending by $222,000. Other cuts include $275,000 in Recreation, $180,000 in the Gas Department and $104,000 in the Streets Department.

“This is the beginning,” Wilson said. “It’s the low-hanging fruit and with and with every purchase we make regardless of the cost, we’re really going to look at these and make sure is this something that we need right now.”