Mayor: Lexington looking at multimillion-dollar shortfall due to COVID-19 outbreak
Lexington Mayor Linda Gorton warned this week the city is looking at a potential multimillion-dollar shortfall in its current-year budget as revenues have plummeted due to coronavirus-related business shutdowns and job losses.
“We do believe it will be a revenue decline of several million dollars between now and June 30,” Gorton said Monday during a press conference at city hall.
Gorton said it will take several weeks for the city to get a firm grasp on exactly how much revenues have declined and how big a hole the city will have to fill in its current-year $379 million budget. The fiscal year ends June 30.
Fewer people working and fewer businesses making profits means less city revenue
Employee withholding taxes — a tax on wages — and corporate net profit taxes are the two main revenue sources for Lexington and all Kentucky cities. Both of those revenue sources have been decimated over the past month as nonessential businesses have closed and thousands of people have been laid off.
The number of people in Kentucky who have filed for unemployment has skyrocketed from less than 3,000 during the week ending March 14 to 112,726 last week, according to federal unemployment numbers released Thursday.
How many of those jobless are in Fayette County is not yet known.
Gorton said Monday she froze hiring and clamped down on spending in anticipation of the revenue drop.
Spending freezes are not in essential areas, such as public safety; garbage or recycling pick up; traffic engineering; or water quality, which oversees sanitation systems, Gorton said.
“We will not know the impact on our third quarter for another week or two,” Gorton said. But it’s not the first three months of the year that’s going to be problematic, she said.
“It’s going to be the fourth quarter,” Gorton warned. The fourth quarter is April, May and June.
Gorton did not say if she expects furloughs or layoffs of city employees.
The current-year budget is already lean with 15 percent cuts to many spending categories and few big infrastructure projects.
The budget that begins July 1 will be even leaner, Gorton had warned before the coronavirus outbreak.
This story was originally published April 7, 2020 at 1:35 PM.
