WOODMERE — Village income tax revenues are in question after Gov. Mike DeWine ordered all nonessential businesses to close on March 22 to help contain COVID-19, a novel coronavirus. Chagrin Boulevard, the main drag through the village, is filled with shops, restaurants and offices that provide tax income for the village government.
During a March 30 council Finance Committee meeting, financial consultant and former treasurer Tom Cornhoff predicted a tax revenue decline in the coming months.
Before the health crisis, total revenue for the general fund was estimated at $3.7 million, according to Assistant Treasurer Pat Dawson. Income taxes alone were expected to bring in $3.08 million this year.
“When we get distributions for April and May, I think those are going to start to decline,” Mr. Cornhoff said.
According to Mayor Ben Holbert, there are more than 300 businesses located in the village, which is one square mile in size.
Ms. Dawson said that in the first quarter of 2019, Woodmere received $631,322 income taxes from businesses located in the village and $2.98 million for all four quarters. In the first quarter of 2020, the village received more than $800,000 in income taxes, which Mr. Cornhoff said is “excellent.” The income tax in Woodmere is 2.5 percent and residents receive a credit of up to 2.5 percent. Residents as well as employees of local establishments pay income taxes.
Mr. Cornhoff said that some businesses in the village are offices and the employees could likely work from home. Others, such as T.J. Maxx, are considered non-essential businesses and are closed. Restaurants can continue to offer delivery and curbside pick-up but some have temporarily closed. He said that Bravo and its sister restaurant at Legacy Village, Brio, both have closed permanently.
“Woodmere cannot survive on restaurants and retail alone and it’s going to become painfully obvious now,” Mayor Holbert said on April 2.
Mr. Cornhoff said that he is also worried about the net profit taxes at the end of the year, which are 2 percent of a company’s profit. The village would typically receive that revenue in 2021, and he said that it could be significantly reduced or eliminated. The village could suffer a loss of $700,000 or more, Mr. Cornhoff said.
He offered four recommendations to village officials to remedy this problem. Mr. Cornhoff said to review the personnel and staffing model and consider shared services with neighboring municipalities. He also advised the finance committee to consider the fiscal impact on the village from widening Chagrin Boulevard, which is set to begin in January 2022.
Village Engineer Ed Hren was not sure yet of how much the village would need to contribute since the project was planned by the Ohio Department of Transportation, but he advised the village to budget $300,000 for contingencies. Mr. Cornhoff also recommended the consolidation of duties in each department.
“The last thing we want to do is lay anybody off or give someone a reduction in hours,” he said. “Everyone needs to work together to keep the village financially solvent without impacting the residents or businesses.”
Mr. Cornhoff said that each department head should meet with the mayor to discuss ways to save money. He added that the administration and council have to work together to find a resolution.