The Town of Winamac could lose up to $175,000 over the next three years due to COVID-19, but it should have enough cash reserves to withstand the loss. Eric Walsh with accounting firm Baker Tilly told the town council Monday that the General Fund will probably see the biggest impact.
“As we go through 2020 and 2021, that’s where we anticipate the heaviest hits of the COVID-19 impact, obviously. 2020 is primarily property tax and gas tax driven. 2021 is primarily income tax driven,” Walsh explained. “This varies from fund to fund, but overall, those are your three biggest hits.”
Baker Tilly estimates that gas tax revenues could be down by as much as 25 percent this year due to the drop in travel. Local income taxes could be down 15 percent when this year’s unemployment is reflected in next year’s revenues.
Still, Walsh said that the town should have $600,000 remaining in cash reserves by the time revenues are projected to recover in 2022. “There’s many communities that we work with that would be envious to be in that position,” he said. “So I think you’re healthy. I think you have the cash reserves to withstand this because you built them up over decades. But I do want you to keep an eye on your General Fund, and I would keep an eye on the fund balances.”
Walsh cautioned that there are still many unknowns with COVID-19’s impact, but he felt his projections were probably a worst-case scenario. He said the projections didn’t look at utility revenues, since they’ll likely recover much more quickly than the tax revenues.
