The county government got good news with strong collections from the June 5 tax collection deadline and an improving unemployment reports, but as Department of Economic Development Executive Director Buddy Rizer warned, “we’re still in a deep hole.”
The May unemployment report showed the fewest new unemployment claims since March, and for the first time since March continuing claims went own. But, Rizer noted, “other than April it’s still the highest unemployment since the Great Depression.” And he said adding jobs back also presents its own challenges.
“A lot of sectors are adding jobs, but the biggest risers have been in retail and restaurant, which of course was the hardest-hit early on,” Rizer told the Board of Supervisors’ finance committee this week. “That, of course, comes with its own set of challenges. We’re currently working through a lot of situations where employees going back to work actually costs them money, because they lose their unemployment benefits.”
Meanwhile, June local tax collections, which Treasurer Roger Zurn had warned could be low as people felt the economic hardship of the COVID-19 pandemic and missed payments, are on track to match previous years. Chief of Staff Caleb Weitz reported that collections are similar to the previous year so far.
“When I spoke with the treasurer earlier today, he has been very pleasantly surprised with how well this collection is going based on his historical experience,” Weitz said. “So far, in looking at the payments coming in, there are not major warning signs of seeing any difficulties with the collection.”
But there, too, some warned, the county is not yet in the clear. The effect of impacts on county revenues lag the economic hardships that cause them.
“I think our general posture going into this was, regardless of the June 5 collection, the one that we’re probably watching more carefully is the Dec. 5, because that’s when we’re going to see fallout effects,” said finance committee Chairman Matthew F. Letourneau (R-Dulles).
County Administrator Tim Hemstreet agreed that he expected strong June tax collections, and that county won’t see the revenue impacts of an economic downturn until the fall. He advised supervisors to hold off on unfreezing new hires or taking money out of their $100 million reserve fund.
The county’s annual finances also appear to be in the black, with a projected year-end general fund balance of around $31.1 million. That is still a far cry from previous years, when the county’s year-end fund balance has approached $100 million, but a hopeful sign as Hemstreet had warned supervisors earlier in the year that the county was dangerously close to breaking even on the budget. By the law the county government cannot operate at a deficit.
And Rizer said there is hope for recovery as businesses enter the first phases of reopening.
“We’ve worked directly with our businesses, and especially over the last couple of weeks as we’ve gotten through the ‘Loudoun is Ready’ process and have been counseling businesses on reopening, there is what I would call a bubbling sense of optimism that’s starting to come back,” Rizer said. “And I think if we can get everybody to start feeling that confidence—especially the consumers—I think we might be OK.”