Bartholomew County discussed the possibility of a hiring freeze and employee layoffs due to a developing fiscal crisis from the COVID-19 pandemic.
At the start of the year, Bartholomew County government was in “really good financial shape,” said county Auditor Pia O’Connor. But all who attended or watched Tuesday’s meeting of the Bartholomew County Council seemed to acknowledge that, financially speaking, the other shoe is going to eventually drop.
Reports about local income tax revenue from April “are going to be pretty devastating,” O’Connor told the council.
Last month, it was announced that all U.S. employees of Cummins, Inc. would see a 10% to 25% drop in salaries and reduced hours, which will significantly reduce the amount of local income tax revenue, council attorney Chris Monroe said.
State budget officials have already announced gas tax revenue used for roads and bridges repairs dropped by $8 million in April from original estimates.
“In addition, we don’t know if the fall is going to bring a second wave of COVID-19, and what impact that will have,” Monroe told the council.
Those combined factors prompted the attorney to recommend that the council not only consider a hiring freeze, but also make public announcements that county employees might be laid off. Even when county government was experiencing a multi-year fiscal crisis prior to 2018, county officials did not give layoffs serious consideration.
Monroe’s advice to warn about potential layoffs was met with resistance from council members.
Council president Matt Miller said the county jail and the 911 Emergency Operations Center have experienced substantial difficulties in hiring and retaining new employees.
“If you put the fear out there that if you are hired now, but may be laid off later, that will hurt our recruiting process,” Miller said.
And since there are small county departments that can’t operate with unfilled positions, Miller suggested all decisions regarding hiring freezes should be done on a case-by-case basis.
A number of council members said they want to see if the jobless situation improves from now through the end of June before taking any action. In Bartholomew County, 1,531 initial jobless claims were filed the week ending April 18, down from 1,845 filed the week before.
However, a total of 7,216 initial jobless claims were filed in the county between March 15 and April 18.
But one council member did not completely dismiss Monroe’s suggestion regarding the possibility of layoffs.
Laura DeDomenic said “if things get really dire,” the county might have to follow the lead of Cummins and other major employers by either instituting temporary furloughs or salary cuts.
The subject of a hiring freeze was listed on the agenda only as a discussion item, so no vote was taken. However, the topic is expected to resurface after second quarter income tax revenue is released on July 1, O’Connor said.
Right now, the county has several advantages outlined by O’Connor Tuesday that gives them a financial cushion that will allow them to see what develops over the coming weeks. Those advantages include:
$4.6 million placed in the county’s 2019 general fund that was never spent.
A supplemental local income tax distribution that provides the county’s general fund with an additional $1 million. That distribution also provides $452,000 for public safety and economic development purposes
A state forecast that indicates Bartholomew County will receive a $4.2 million increase in property tax revenue next year.
Instead of a property tax hike, the additional revenue will come through what’s called a “growth quotient” calculation, O’Connor said. That is essentially a rollover of funds to each of Indiana’s 92 counties that is calculated from averages involving non-farm personal income.
But even with a one-time increase in property tax revenue, Monroe reminded the council there will be a delay in receiving those funds, due to all the complications caused by the COVID-19 pandemic and shutdown.
When all positive financial factors are combined, Bartholomew County government may not feel the real impact of the current economic crash until 2022, O’Connor and Councilman Mark Gorbett said.
Nevertheless, Miller strongly advised the council to develop a proactive, rather than reactive plan, after the July fiscal update is received that will put the county in a better position when steep income deductions arrive.
