PADUCAH — Paducah City manager Jim Arndt says the city is starting to feel the effects of COVID-19. "When the economy is hurting, the city's finances — basically, it's relative — they hurt as well," says Arndt.
The city relies heavily on the local occupational tax, which brings in around $24 million a year. COVID-19 is keeping a lot of people out of work, which means the city doesn't get as much from the occupational tax. That will have a direct impact on the next three months, which is the end of Fiscal Year 2020 budget. In order to pay for essential things like police and firefighters, Arndt says they won't be able to fund nonessential things for the time being.
"The pool, the spray ground, special events that we typically put on during these times of year, those aren't occurring, so those expenditures won't be impacting us — and basically looking at those and saying we're not going to fund those this year," says Arndt.
Paducah Mayor Brandi Harless says, while there are definitely short-term financial impacts, they'll have to be prepared for long-term issues, too. Because it's unclear how long the economic downturn will last, it's hard to determine right now what other things might not be funded in the Fiscal Year 2021 budget that begins in July.
Before the COVID-19 pandemic, the city was working on three big projects: the aquatic center, the downtown hotel development, and getting approval from the state to form a tax increment financing district. Although the city has already secured more than $20 million in bonds to build the aquatic center, operating costs were already projected to run deeply in the red — by hundreds of thousands of dollars for at least five years.
"I think that the framework by which we evaluate those projects is still intact, but you know how we're all trying to think about our own businesses. The economic realities may have shifted a little bit," says Harless.
Ultimately, determining which projects move forward depends on the money that the city does have.
"The money is going to drive that, you know, if the funding is available to continue to move forward with those projects: that primarily being the indoor recreation aquatic facility," says Arndt.
We reached out to other mayoral candidates about this issue. Mayoral candidate and City Commissioner Richard Abraham declined an on-camera interview, but did send us the following statement.
"In my study of the history of Paducah, I noticed that we always have taken care of each other. During the first part of the 1900’s, when Paducah suffered from several disasters, as well as surrounding areas, and the Federal Government sent supplies here to help out, the City of Paducah sent the items back with the word that ``We take care of our own”. I realize the Federal Government has already taken and has promised to take more steps to help out the states, municipalities and the individuals. But it would be best if we did not have to wait and hope and depend upon a national government to reassign our, own, tax dollars to try to help us. If we receive help from there, ok, if not, then we need to have another plan addressing what is ‘in our own hands’, at present. The questions from the Press, on behalf of the community, are very much in order. In this emergency, we, as well as everyone else, are in uncharted territories. Paducah has also always been a supportive and loving town, but to quote an old adage, “...these are the times that try men’s souls.” We certainly have, ‘in our hands’ and at our disposal, the means to come through this disaster, perhaps a bit better than other municipalities that are facing the same problems. All things should be ‘on the table.’ When looking at the projected income, for the next year, from a bit of our financial life blood, in the form of payroll taxes, and adding that figure with the projected income from business licenses (which will be tardy this year because of part of our stimulus help for local businesses) you will see a strangely familiar total of 20+ million. Keeping in mind, with the Grace of God, that all payroll taxes should not be wiped out and all businesses licenses fees should not be wiped out. The Business License fees should only be late. However, if they were completely wiped out, the 20+ million, at our disposal would practically cover this entire loss. As we consider the 20+ million the city currently has invested (that has received a loss in interest income in the current market) that has been pinpointed for the future Noble Park project, we must ask ourselves to consider the ‘coincidence’ that the figures are so similar and just how important is this ‘future project’ with the difficulties we face now. The 20+ million, set aside for the Noble Park Project, can raise us up or it can break us, based upon the decisions of this commission. Taking the bull by the horns and using what is in our hands, is the most wise and healthy stance we have at our disposal. To consider cutting back on services and jobs would most certainly project weakness and a lack of integrity concerning the health of our financial status. To follow the philosophy of Occam’s Razor, my position is that the simplest decision is the best one."
Mayoral candidate George Bray says he believes the current economic situation will force the city to pause the three projects leaders were working on before the pandemic.
"I think it's important to focus on the right things, so the city has to focus on essential services and the right things. Those projects by definition will have to be paused," says Bray.
The primary for the mayoral election has been postponed, with the rest of Kentucky's primaries, until June 23.