The Covington Department of Finance gave a presentation on the city’s budget for the first half of the fiscal year at the commission meeting Tuesday night.
Finance Director Steve Webb described the numbers as “better than expected,” although he admitted that the gap in payroll tax revenue arising from work-from-home labor arrangements at large local employers like Fidelity was still at play.
“We’re catching up,” Webb told LINK nky after the meeting, adding that the city’s analysis showed upward trends in Covington’s economic growth in the city overall, except for the hole left by work-from-home.
Budget Director Joel Baker presented the figures to the commission. The counts Baker presented represented the figures for the time period between July 1 and Dec. 31, 2023. Counts up to Dec. 31 actually put the city in the black, with overall revenues for the general fund exceeding overall expenses by about $2 million.
At first glance, this might indicate the financial woes of the city established over the past year or so were subsiding, but both Baker and Webb stressed that these figures represented collections and spending as of a certain date; different forms of revenue come into the city’s coffers at different times of the year.
The overall general fund figures, for instance, included $9.2 million in property tax revenue the city had received in October, which was usually when property taxes came in. Moreover, the city had received $1.2 million in delinquent payroll taxes originally slated to arrive in 2022. On the other hand, revenue from taxes on insurance fees had increased by about $1 million compared to the previous year. All of this had the effect of pushing the city just over the edge in revenues.
Baker qualified that, really, the delinquent property tax ought to count toward the revenue from the previous fiscal year, in contrast to the figures as they appeared before the commission. This actually made the payroll counts lower by about $1.5 million at the close of fiscal year 2024’s second quarter compared to the same time in fiscal year 2023.
“That is the continuing effect of our largest employers’ employees working from home outside of the city of Covington,” Baker said.
Commissioner Tim Downing asked about an expenditure category labeled transfers and other uses, a somewhat nebulous category that showed a significant decrease when compared to the same time the year prior.
“Do you anticipate that we’re going to end up being well under budget in that amount,” Downing asked, “or do you think that we’re going to be getting close to it…?”
Downing didn’t ask about it directly, but Baker answered using the example of employee overtime.
“So we were understaffed in some areas, I believe between police and fire, maybe 12 people,” Downing said. “So, one of the things we’re learning is with [paid time off] and lower headcount, that is driving the overtime up.”
In other words, lower staffing levels have compelled some city departments to rely more heavily on overtime, which is paid out at a higher rate than normal compensation. This conversation was germane to recent controversies about overtime cuts to the fire department, which led to a backlash from Professional Firefighters Local 38, Covington’s fire union.
In spite of the recent tension, Baker said that the finance department’s investigation indicated that overtime payouts over the past three pay cycles were actually down.
“So what we do is we monitor and look at the reports, and actually for the last three payrolls… we had the three lowest overtime periods of the year,” Baker said.
“Just to put a finer point on my question,” Downing said, “when we’re taking a look at the transfers, because we’ve got a pretty substantial gap there, especially when we compare last year, are we anticipating that we’re going to end up under [budget]?”
“With the transfers, I want to say we will be really close to the budget,” Baker replied.
View the city’s full budget for the 2024 fiscal year here. You can also see the finance department’s complete presentation from Tuesday by clicking here.
The next meeting of the Covington Board of Commissioners will take place on Tuesday, March 19 at 6 p.m. at Covington City Hall on Pike Street.