Local Municipalities Feeling Financial Strain Of COVID-19

STARKVILLE, Miss. (WCBI)- Several cities and towns are feeling the financial strain of the coronavirus.

Due to restrictions on many businesses and people staying home, the sales tax for most places has reduced significantly, which could cause a potential shortfall in city budgets

In Starkville, “Closed” signs are common, but not only are they common, they’re also bad news for the bottom line, both for the business and city.

“We have learned from the Mississippi Department of Revenue that they are projecting between 25 and 40 percent loss in sales tax, which will put us at about a loss of $1.3 million,” said Starkville Mayor Lynn Spruill.

Mayor Spruill said roughly 40% of Starkville’s budget comes from sales tax.

“A city works like a business, we work from a projection of revenue, and if we don’t make that projection then we’ve got to act quickly to mitigate those losses,” the mayor explained.

To help compensate for those losses, the mayor is proposing cutting operational costs by more than $730,000.

She is also proposing cutting salaries including hers, the board of aldermen, and all department heads by 20 percent.

“I had somebody mention to me earlier what about the board and the mayor taking a more severe pay cut and leaving the department heads alone,” said Spruill. “I am happy to do whatever the board is willing to do. I am perfectly willing to take a much larger pay cut if the board wants to go that route.”

Under the proposal, 15 percent of the city’s employees would be furloughed.

“They will get $600 from the Federal CARES Act, they will get $235 from the city, and they will keep their healthcare benefits, so that’s good for the furloughed and that would be good until July 31st,” said Spruill.

Meanwhile roughly 20 miles west of Starkville, the town of Ackerman is also feeling the pinch of lower sales tax collections.

“Exactly how much, it’s too early to say, but you can look, and it’s pretty dead right now,” said Ackerman Mayor Tim Cutts.

While it’s inevitable the town’s sales tax is down, Mayor Cutts said they haven’t had to furlough or lay-off any workers, and he doesn’t anticipate that happening.

”I don’t think we’ll have to do anything to the budget,” Mayor Cutts expressed. “I think we can absorb it in various places, we just might not spend money that we have put opportunities to do a few things, but I think all in all, we’ll weather this storm.”

Starkville city leaders will discuss and vote on whether to make the budget cuts and furlough workers during it’s board of aldermen meeting on Tuesday.

During that meeting, Mayor Spruill will also ask the board to transfer up to $100,000 from its Rainy Day Fund to help them cover the shortfall.

If approved, the budget cuts and furloughs will remain in place until further notice.