Expecting a worst-case scenario for Hattiesburg’s pandemic-stricken economy, Mayor Toby Barker and the city’s economic leaders were forecasting the most realistic budget expectations that they could. Barker received April’s sales tax revenues in the middle of June, when a 30 percent drop was predicted by the city government. He said he received better than expected news.
“What we found was April 2020 is $1,548,600.91,” he said in a daily COVID-19 update on Facebook. “It is compared to April’s 2019 number, which is $1,884,599 – still a 17.8 percent drop. It is well under the 30 percent drop that we had feared the most.”
April is forecast as the worst month of the pandemic tax shortfall because Shelter in Place was in order and most economic parts of the Hub City were shut down, including in-house dining or nonessential retail. Barker said the early economic decisions were difficult.
“We started getting the numbers in late April, but in March about half of the month was shut down in a lot of our restaurants and other retail,” he said. “We had to make some difficult decisions with the reduction force, understanding how the worst-case scenario happens. In March 2019, we received $2,081,372. Fast forward a year later, that had dropped to $1,794,311 – a 13.7 percent drop.”
Barker said the May 2020 number was 13.7 percent, so the April number was anticipated at 30 percent.
“April was the month that Governor Reeves had us under Shelter in Place and March was half a month because it produced 13.5 percent,” he said. “Forecasting out a 30 percent drop in June, July, and August – which, of course, reflect the sales tax months of April, May, and June – we were looking at possibly more than $2 million in sales tax loss from year over year.”
Barker said the city doesn’t set the budget numbers on what sales tax was collected last year.
“We try to go a little bit more conservatively than that, so in case we have some bumps we can sort of absorb those,” he explained. “So, year-to-date budget shortfall is $490,000; the year-to-date year-over-year shortfall is $548,708. If that worst-case scenario, even with the improved numbers, will go to a $1.48 million shortfall – compared to the $2 million we thought – the $1.4 million is a welcome development.”
Hattiesburg will see a better-than-expected economic future with smaller shortfalls.
“Essentially while we’re still seeing shortfalls compared to last year, it’s good to see them in the worst-case scenario in the worst month because we just received that drop of only 17 percent,” Barker added. “What we think this will mean is that we will not have to do any more reductions in force if things continue in this way. We hope that the worst-case scenario, even under the improved plan, continues to get better and we see our numbers start to trend upwards.