Financial Impact of the Corona Crisis
The corona crisis is forcing councils to deal with some tasks. One of them, the importance of which will only become apparent in the future, is the collapse in tax revenues. At the recent meeting of the local council, treasurer Lucas Hansen explained the current situation as well as its possible consequences.
Maintaining the town’s liquidity is now the top priority. As a result, the cash credit in the 2020 budget was increased to € 8 million as a precautionary measure.
The city treasurer explained the current situation to the councils by reiterating the absence of any significant changes in the status quo of the current budget. It is true that some of the taxpayers had asked for deferrals or adjustments to advance payments. The current business tax revenue amounts to € 2.1 million.
Nevertheless, there will be further shortfalls (amusement tax, visitor’s tax and tourism tax). Decreases are also expected in chargeable services such as kindergartens, school care or the open-air swimming pool, which will also have an impact on the town’s financial revenue.
When it comes to the profit and loss budget, the town can only wait and see before acting. With regard to the investment budget, continuation of the initiated measures is proposed as long as they are state-subsidised.
He stated that “the assumed future effects can be estimated, based on the nationwide tax estimate made in May. This estimate was based on the assumption of an overall tax decrease of 10.2 percent. Nevertheless, we must wait for the Baden-Württemberg tax estimate for the administrative districts to get a more detailed insight. However, we can safely say that revenues will be lower in 2020”.
In order to counteract this, all deferrable measures will be put to the test in the profit and loss budget. In the area of maintenance of properties and assets in excess of € 5,000, only indispensable measures that have not yet been started or authorised will be implemented. In the financial budget, each investment would be checked for deferral if there was no subsidy or deadline.
There are also external measures. For instance, the state has already made compensation payments of € 147,000 for cancelled kindergarten fees. In addition, there is currently around € 52 billion available in financial aid for states and councils.
The deficit that will occur in 2020 must be compensated for promptly. This is why a financial report will be now be presented at each of the upcoming municipal council meetings. In this way, necessary decisions can be made at short notice. A working committee will deal with the monetary development.
Like the administration, the municipal council spoke out in favour of close cooperation in this matter. With equanimity, deliberation and foresight.