COVID-19 is expected to take a tremendous economic toll in Williams, whose revenue from Interstate-5 commerce is the highest in Colusa County.
Finance Director Rex Greenbuan said that while actual sale tax numbers for the current year won’t be available until late September or October, he knows the city will take a tremendous hit on all revenue sources as a result of the economic shutdown.
“We were having a very healthy fiscal year up until the last few months,” Greenbaun said.
Greenbaun said he anticipates the city will have a shortfall of about $240,000 in the current fiscal year, which ends June 30, and expects those numbers to worsen in the next budget cycle.
“Looking forward, it’s still pretty early to predict what we will have, but I’m forecasting a deficit closer to about $850,000 for 2021,” he said.
The city has already taken some measure to help offset the shortfall, including the layoff of two city recreation workers. The city has also frozen a police officer position and a facility maintenance worker. Although the savings in the next fiscal year from the staff reductions will be about $324,000, the city is still looking at a deficit of more than $500,000, Greenbaun said.
“That’s a very early forecast,” he added. “We are going to get more data over the next two months and it depends on a bunch of factors, depending on how well the reopening goes and some return to normalcy.”
Prior to the pandemic, new business development attributed to a big bump in sales tax revenue for Williams. For the sales tax year ending June 30, 2019, tax revenue increased 56.7 percent over the previous year.
Sales tax revenue for the city does fluctuate from year to year because the majority of revenue comes from gasoline sales, meaning revenue goes up or down with the price of gas.
In 2019, Californians paid an average of $3.72 per gallon, up from $3.56 in 2018, according to AAA. However, due to an oil war between Russia and Saudi Arabia, the average price of gas in January, prior to the pandemic, was $3.47.
But low oil prices combined with COVID-19 travel restrictions that left far fewer drivers on the road, California gas prices have only averaged about $2.76 statewide since February, the lowest price in three years, although the price of gas increased about 5 cents a gallon for Memorial Day weekend.
On Monday, regular unleaded gasoline at Love’s Truck Stop in Williams was $2.60 a gallon.
Greenbaun said Williams would also take a hit on Transient Occupancy Tax revenue, due to the shutdown, which is revenue generated by stays in local hotels. In 2019, TOT garnered $588,183 for the city, up $92,250 over the previous year. This year’s total is expected to come in below 2018 levels.
Greenbaun said overall, however, Williams should fare better than other cities, who may see their revenue set them back to revenue levels 10 or more years ago, but that the city is still facing a lot of unknowns from the state and federal governments.
“We’re still a ways out to knowing what our final figures will be,” he said.
While too early to completely predict all the impacts from the COVID-19 pandemic, Greenbaun said he does anticipate overall inflation on goods and services to be a likely result.
“Everything we are doing is unprecedented,” he said. “I’m no expert on the monetization of what and how this is going to impact us, but the federal government just can’t print money without there being consequences. It seems that the most likely result is high inflation.”