I have a job for you: Build a house. When you’re done, build a second one, the one I’ll need in the future.
Tools? Sorry, I have none. You’ll have to fashion those yourself.
Blueprints? No, maybe later, but, even then I can’t guarantee their accuracy.
Quality? Hey, it better be first class. I’m going to pay you well, and you had better finish on time.
Sounds impossible, but it’s a glimpse into the currently chaotic world of Chris Caldwell, Knox County’s chief financial officer and deputy assistant to the mayor. Caldwell’s revenue forecasts for the remainder of the current fiscal year (2020) and fiscal year 2021, which begins July 1, will serve as a road map for current and future outlays. Now, even as business slowdowns and closings stifle sales tax revenues, there are few available guideposts.
Sales tax collections flow to the state coffer and are redistributed from there. Real-time knowledge of what has been collected and will be forthcoming is, in the Bard’s words, “a consummation devoutly to be wished.” It ain’t happening anytime soon without a revolution in point-of-sale reporting and data accumulation.
Consider: February sales and use tax returns were due on March 20. It will be April 15 before the county gets the results.
Consider again: Little if any slowdown in retail business due to coronavirus fear revealed itself in February. It was March before COVID-19 alarm bells began systematically closing or curtailing local retail businesses, and the impact on tax revenue will remain a best guess until mid-May.
Now, armed with this imperfect knowledge, forecast revenue for the final quarter of FY 2020 and – when you have a spare minute – do the same for the new budget that debuts on July 1. That’s Caldwell’s job, to deal with the “unknown and unprecedented.”
Surveying the current budget, he admits there’s “not a lot to do about 2020. That train has left the station.”
In short, you’re stuck with the budget you have, so Caldwell takes consolation in the county’s relatively healthy “rainy day” fund balance. Beyond that, modeling and modeling again as fresh data arrive is all that can be done.
Caldwell notes that the “CARES Act,” the $2 trillion federal stimulus bill, should provide some benefits for local governments. (About $340 billion is allocated for local governments, including $12 billion for K-12 schools.) But, he adds, he’s yet to wade through the 800-plus pages of the act, and the devil, as always, is in the details.
He speaks regularly to finance chiefs in surrounding counties, and he’s also drawn on expertise at the University of Tennessee. What depends on the accuracy of his forecasts, especially for FY 2021? Plans for schools, libraries, parks, healthcare, public safety, non-profits that depend on government funds and dozens, if not hundreds of jobs.
It’s enough to make any beleaguered financial analyst turn off the lights early and grab an adult beverage, but Caldwell remains at the wheel.
“I feel a little more positive today with the news out of Washington and New York,” he said.
Let’s hope events don’t dampen that feeling.
Larry Van Guilder is the business/government editor for Knox TN Today.