The overall financial impact due to COVID-19 may not be known for some time, but municipalities in the Stateline Area say they are preparing for tough financial decisions to be made during budget planning for 2021.

Wisconsin Gov. Tony Evers said the state could see $2 billion in tax revenue losses due to COVID-19, and that could impact Beloit, a city that received $16.14 million in state shared revenue in its 2020 budget. About 60% of the city’s general fund budget comes from state shared revenue funds.

The city retains at least three months’ worth of general fund operating expenses, or 15% of its operating revenues to be held in reserve, with the 2020 budget highlighting that the city “has managed to reserve funds in excess of these minimums.”

Current budget estimates are the city will have $169,218 in undefined fund balance as of Dec. 31.

At the onset of the pandemic, Beloit City Manager Lori Curtis Luther directed department heads to reduce total spending, while applying additional scrutiny in terms of hiring or filling vacancies.

Beloit Finance Director Eric Miller said it was too soon to calculate revenue losses and increased expenses related to the city’s virus response, but noted revenue losses are expected for 2021.

Miller said the city would review criteria related to the state’s Routes To Recovery grant program for reimbursement on COVID-19 expenses.

He added that the state has yet to provide local governments with “any guidance” regarding the status of state shared revenue for both this year and 2021.

“We are actively monitoring the situation and will continue conversations regarding contingency plans throughout the budget process so we will be prepared to act when we hear something from the state,” Miller said.

The city’s budget process starts in the summer before a proposed budget is presented to the Beloit City Council for review in the fall, with councilors typically voting on a budget in November.

Rock County Administrator Josh Smith said the county received around $79 million in state aid that accounts for 40% of the county’s budget. Smith said he’s informed department heads to expect state aid reductions for 2021.

“We are also planning for reduced net new construction, which reduces the amount of property taxes that can be raised,” Smith said. “We also expect a reduction in sales tax in 2020, and would be planning for reduced receipts in 2021 as well, although we hope the economy rebounds quickly.”

Smith said the county would begin pre-budget planning over the next several weeks.

State Rep. Mark Spreitzer, D-Beloit, said budget implications due to COVID-19 will be better known by this fall.

Spreitzer said lawmakers should act to accept federal Medicaid expansion funding; direct the state’s “rainy day” reserve fund to stabilize the budget; and possibly review the use of newly collective sales taxes from online retailers to be redirected towards balancing the state budget.

The state’s reserve fund had over $600 million on-hand before the pandemic started.

“Even using pessimistic projections for our state’s economy, the ideas I’ve laid out here would alleviate more than half of the shortfall that is feared and could help delay its impact while we work together to finish balancing our budget in these difficult times, without cutting critical funding for our district,” Spreitzer said.

State Rep. Amy Loudenbeck, R-Clinton, urged local governments “to conserve resources and plan for flat budgets at best for the next fiscal year.”

Loudenbeck highlighted the impact COVID-19 has had on families across Wisconsin, noting that state resources should be aimed at helping people get back on their feet.

“While we wait for new revenue collection forecasts to come in after the extended tax deadline, we should be focusing the efforts of every state agency on providing exceptional and timely services and support,” Loudenbeck said.

In Illinois, many municipalities rely on revenue from video gambling sources along with sales tax collections.

South Beloit Finance Director Don Elliot said as of June 24, the city has seen revenue decrease by approximately $140,000 compared to 2019. Elliot estimated the city could lose out on $500,000 by the year’s end.

Major expenses of around $200,000 will be delayed until revenues return to normal, Elliot said.

“The remainder will be covered by cash reserves,” Elliot said. “The longer-term impact will be evaluated in the 2021 budget process.”

In Roscoe, the village averages around $31,250 in gaming revenue every month, coupled with $1.61 million in sales tax revenue for 2018 and $1.72 million in 2019, village finance data shows.

Before the outbreak of COVID-19, the village anticipated about $1.84 million in sales tax revenue for 2020, Roscoe Village Administrator Scott Sanders said.

Sanders said the village was preparing for major losses in sales tax and video gambling revenue heading into 2021 budget planning. In overall revenue, Sanders estimated the village could lose out on around $700,000 in revenue.

“It’s manageable but not catastrophic for us,” Sanders said. “We’re going to have to make changes and shift the way we do things.”

Some of those changes have already come to bear, with part-time village public works staff being laid off, with full-time staff tasked with maintaining and repairing areas that are critical, Sanders said.

Sanders said he felt the most relief would come from the federal level, with village staff and village board members looking to position the municipality in the best position to receive fast-tracked funding for infrastructure and other direct aid projects.

That preparation, Sanders said, is evaluating the Rockton Road and Willowbrook Road corridor for future development aimed at stimulating economic growth. Sanders said the village is in preliminary talks with various development firms regarding plans for the area, but declined to comment on details of those discussions.

“We want to be poised so that in a year or two we can say we are ready to go,” Sanders said. “We want to be ready when the time comes.”

Rockton sees about $5,500 monthly from gaming revenue, according to Village Collector Corine Hughes. For sales tax, the village generated $854,301 in 2018 and $906,098 in 2019.