Utah County Deputy Clerk/Auditor Josh Daniels said the county will almost certainly see reductions in revenue for the year due to COVID-19-related business closures, unprecedented unemployment claims and slowed down economic activity, but added that “it is a little bit early to tell how big of an impact this will have.”
“No doubt there will be some reduction in sales tax revenue,” Daniels said in an interview Wednesday. “How big of a reduction really remains to be seen (and) depends on whether we get back up to speed with our economy.”
Utah County budgeted 32.8 million in projected revenue for the 2020 fiscal year, according to Daniels, a projection that he called “super conservative” since “it was built on a target that we exceeded last year.”
The 2020 projection was based on 2019’s estimated sales tax revenue of $31.7 million. The actual sales tax revenue for 2019, however, was $32.2 million.
“We budgeted in 2020 a very conservative estimate for sales tax revenue, the deputy clerk/auditor said. “So conservative, in fact, that I think that will blunt the impact of a reduction in sales tax revenue.”
Daniels said the county will have a better idea of how sales tax revenue will be impacted by pandemic-related closures once the Clerk/Auditor’s Office receives March’s sales tax numbers from the state at the end of May.
Until then, “we don’t have any hard numbers about reductions in general sales tax revenue as impacted by these social distancing measures,” said Daniels. “So certainly revenue will be down. How significantly, I don’t know. It’s too soon to tell.”
The biggest decreases, Daniels said, will likely be from the county’s Tourism, Recreation, Cultural and Convention (TRCC) tax fund and Transient Room Tax (TRT), which are used to fund recreational services and tourist activities, including a bond on the Utah Valley Convention Center in Provo.
“That’s probably where we’ll be hit the hardest,” Daniels said, adding that rough, “back-of-the-napkin” estimates show that hotel and restaurant tax revenues could be reduced by as much as 50% during the pandemic.
Daniels said the county has a fund balance in place “that can help ensure that we make bond payments in a timely fashion” and fund other critical expenditures covered by the TRT and TRCC tax fund.
Another source of county revenue is property taxes, which are due in November. Daniels said he didn’t anticipate the pandemic to have an impact on the property taxes revenue collected by the county.
“The only thing that might change ... is whether people put off paying their property tax for some period of time,” Daniels said.
On average, the county has a property tax collection rate between 93% and 94%, according to Daniels. The collection rate dipped to 83% as a result of the 2008 recession.
“If things turn around here with our economy, I would anticipate potentially people being able to make those payments,” said Daniels. “But if we go into a recession, which I think is probably likely given what’s happening with unemployment, then we’ll probably see a dip in our collection rate as we have in past recessionary years.”
As far as how the pandemic has impacted departmental spending, Daniels said, “fortunately we haven’t had any sort of mass response needed yet that has triggered any large-scale expenditures.”
“In terms of … emergency-related expenditures from the Health Department or the Sheriff’s Office, we anticipate federal grant funding through the CARES Act being applicable to some of those types of expenditures,” Daniels said. “So I imagine that most of these special emergency-related expenditures that the county’s going to make, we’re going to be able to recoup a lot, if not most of that, through grants.”
Daniels said the county has implemented a hiring freeze and is currently only filling essential or critical positions, which will “have an impact on our budget in terms of cost savings.”
A separate portion of Utah County’s revenue, service fees, has actually seen some increases during the pandemic. According to Daniels, the volume of applicants applying for marriage licenses online has skyrocketed.
“We are easily three times over our typical volume of marriage licenses at this time of year,” said Daniels. “And it’s because people from all over the state are coming to our county virtually to get their marriage license online since many local county offices are closed in other counties. So that’s actually an increase in revenue.”
Overall, Daniels said he is optimistic about the county getting through the pandemic financially and that he doesn’t anticipate that the county will need to re-open the 2020 budget to make any major adjustments.
“I actually think that when it’s all said and done, our net budget impact of this disaster is probably not going to be as severe as some may be concerned that it would be,” the deputy clerk/auditor said. “It really depends on how long this kind of shut down, if you will, of community activity lasts.”