As the hotel, motel and restaurant industries continue to suffer financial losses because of the COVID-19 pandemic, officials from the City of Hattiesburg are looking at the ramifications - and possible solutions to - the loss of revenue brought in to the city via the additional 1 percent sales tax instituted at those establishments.
Although numbers for the March revenue from that tax won't be available until Mid-may, officials are aware that hotel occupancy is hovering at around 10 percent, which is expected to drastically reduce the $28,000 to $34,000 that is usually generated to the city monthly by the tax at hotels and motels.
"Of course, only half of that comes to us; the other half goes to Southern Miss," Mayor Toby Barker said. "So we'll probably go from averaging $16,000 to $17,000 a month from hotels going to the city to probably $1,700 to $1,800 for the next few months.
"But just like we are with all of our city finances right now, we're trying to make contingency plans. If this lasted through the end of the fiscal year, through September, what does that do to our bottom line? We're looking at things like hiring freezes, except for public safety departments, of course."
Although a hiring freeze may be instituted, Barker said there are no intentions of layoffs in any city departments. Currently, public-facing employees who are over the age of 60 are on paid administrative leave to minimize their chance of contracting the virus.
That offer - which was approved by a state auditor and the Mississippi Legislature - is being extended to any city employee with underlying health issues. In addition, non-essential employees may be rotated out of the office to limit person-to-person contact.
"All those things together sort of work to hopefully slow the spread inside the city workforce," Barker said. But in terms of a hiring freeze, anything that comes out of the general fund - except for public safety - we intend to hold those (positions) vacant for quite a while."
As far as the Parks and Recreation Department projects that are being funded by the 1 percent sales tax, officials are proceeding with the projects that have already gone out to bid. Fortunately for the city, the first nine months of the 1-cent revenue came in above projection, with the same expected for March and April.
"So that sort of gives you some cushion, in terms of what you can use for project, but in the end, some projects will probably have to wait a little bit," Barker said. "But we're watching every dollar that comes in, and if there's anyone good at shaving down a project, it's Sid Gounsoulin, who's our construction projects manager for parks.
"And he's been very good at making sure that we're continuing to make progress in these facilities, while also understanding that we're going to have to re-evaluate revenue over the next six months."
The 1 percent sales tax increase on restaurants, hotels and motels was approved by Hattiesburg voters in April 2019 and went into effect shortly after. Half of those funds are earmarked for 17 Parks and Recreation Department projects throughout the city - including a walking trail extension at Duncan Lake and a roofing project at the Hattiesburg Community Arts Center - while the other half will be used for renovations at Reed Green Coliseum on the University of Southern Mississippi campus.
Barker said whether it's the 1-percent projects or continuing to provide day-to-day city operations, officials are committed to delivering to the citizens of Hattiesburg while protecting the city's employees. Officials also are mindful of proactively making monetary adjustments to ensure a balanced budget at the end of the fiscal year.
"Part of the (Coronavirus Aid, Relief and Economic Security Act) includes some money for states - I think every state gets at least $1.25 billion - and obviously, we will advocate that some of that goes to help offset some losses in revenues for cities," Barker said. "But I know that's going to be a long conversation, and the state has a lot of needs.
"For a town like Hattiesburg, sales tax really does drive a good portion of our budget every year, and we expect some serious falloff. At the same time, we kind of saw the landscape shifting during the first couple months of the year, and made some decisions to not fill positions then, which will obviously assist us in trying to make sure we stay balanced throughout the rest of the fiscal year."
For as long as the pandemic continues, public health will remain the city's top priority.
"While we're taking care of the immediate threat to our people, we're also keeping one eye on the bottom line, and how we're hopefully going to help kickstart the economy when this thing passes, and it will," Barker said.
