SIDNEY — The city of Sidney’s new five-year financial plan predicts a quick financial recovery from the impact of COVID-19, followed by a moderate economic growth scenario for income tax.
The 2021-2025 financial plan was introduced by Finance Officer Ginger Adams, with City Manager Mark Cundiff, during Sidney City Council’s hybrid workshop session, Tuesday night.
The plan encompasses Sidney’s Comprehensive Plan, council’s goals, the long-term financial plan and capital planning to determine the annual budget.
Adams’ report showed a 7.5% decline in 2020 revenue from 2019. The 2021 income tax economic growth is expected to recover 1% greater than the 2019 collections, and indicates an average annual growth of 3.35% for years 2022-2025. This supports the general fund. She stressed the plan does not include one-time revenue sources, such as any CARES Act (coronavirus relief fund) distributions, future federal stimulus funding or Worker Compensation rebates.
Over the five year planning period, the plan includes the addition of 11 FTE (full-time equivalent) staff member positions to be filled, based upon passage of the fire levy. These positions include: nine new Sidney Fire and Emergency Services positions in years 2023-2025 for the proposed fire station No. 3, pending levy approval; an IT analyst in 2022, pending Shelby County approval and economic recovery; and a solid wast code enforcement officer in 2022.
There are several staffing positions that will temporarily remain vacant through 2021, due to the economic impact caused by the COVID-19 pandemic. These positions include assistant city manager, Shelby County Municipal Court deputy clerk, two firefighters and two police officers.
Adams said a there was a net reduction of 3.25 FTEs from 2019 to 2020 after COVID-19 budget cuts. With these staffing changes, excluding additions to a potential Fire Station No. 3, the city’s staffing level will be 2% lower in 2025 than it was in 2008. Following the Great Recession the city cut 37 employees due to the 2008 economic downturn.
In terms of expenditures, her report showed a modest 2.5% to 3% increase in “contractuals, materials and others;” 2.25% wage scale increases; and a 6% cap on health insurance premium increases.
During the plan overview, Adams said the city of Sidney’s revenue from direct collections is down for the year by 47% compared to 2019. This revenue is from businesses’ profits, which is generated from municipal income tax collections by withholding taxes from people working within the city. Direct collections is a volatile source and is prone to the up and down fluctuations over many years. Adams said the reason it is down, is because corporate estimates on net profits are down.
Direct collections show a projected decline of 22% in 2020, Adams said, rebounding slightly higher than 2019 collections, in 2021; and modest annual increases for years 2022-2025.
The withholding income tax, which is the amounts withheld from employees’ pay, is down almost 6% for the year, compared to 2019. Adams’ report shows a projected 3% decline in 2020, recovery in 2021, followed by average annual increases of 3% thereafter.
Income tax collections is projected to decline by 7.5% in 2020. This is followed by recovery to slightly higher than 2019’s actual collections. An average 3.4% annual increase is projected over the remaining planning period of 2022-2025, which is projected to be $16.7 million.
Reach the writer at 937-538-4823.