Du Quoin's sales tax receipts dropped significantly in June, causing Mayor Guy Alongi to be concerned that the full effect of the pandemic has finally arrived.
Sales taxes for April and May -- the first full months of school and business closures driven by the pandemic -- were considerably higher than anticipated, as residents stockpiled supplies and spent stimulus checks.
However, June's receipts, which arrived last week, show that Du Quoin was about $17,000 off the pace from May and a full $22,000 less than June 2019.
Municipalities receive their sales tax numbers from the state a little more than two months after the fact.
"Maybe now we are starting to see the turn toward the bad side of this pandemic," Alongi said Monday. "Maybe it's just taken two to three months to get here.
"I think people bought up and hoarded a lot of goods and gone through their stimulus money," he added. "Now our sales tax money may be affected by the pull back."
In May, the municipal sales tax receipts were $109,587, which dropped to $105,657 in June. The home rule sales tax in May was $124,339, which fell to $115,116 in June.
The Business District tax produced $35,698 in May, which fell to $31,592 in June.
Alongi, however, said it is not time to panic or go into crisis mode. Right now, the downturn is only one month, the city has been prudent with expenses since the beginning of the pandemic and the city's two biggest sales tax producers, Walmart and the Prysmian Group (formerly General Cable), are still doing very good business.
Alongi said without Walmart or Prysmian in Du Quoin, however, the city's financial picture could be "devastating."
As it is, "I would consider our finances from a council standpoint to be on a 'watch' list," he said.
The mayor said he will begin discussions with the city department heads, to talk about finishing the 2020 year and beginning to plan the 2021 budget. The city's fiscal year ends Dec. 31.
As well, negotiations with the FOP will start soon, as the Du Quoin police contract ends on Dec. 31.
As the pandemic was taking hold a few months ago, Alongi warned that the effect on Du Quoin could be devastating, and said the city could lose $500,000 to $750,000 this year alone and possibly as much as $1 million over two years.
When April and May receipts were healthier than expected everyone breathed a little easier. Now, the future is less clear.
Alongi said he doesn't know if the loss of sales taxes will "be as severe as I first thought," but the city will begin soon to plan. He expects future monthly sales tax receipts to continue downhill for the time being, and eventually that could affect the city's workforce.
Alongi said more than 80% of the city budget is spent on personnel, including benefits. He said there isn't a lot of wiggle room in that remaining less-than-20%.
"We want to keep everybody working in the city if at all possible," Alongi said. "And they have a great benefit package. But when you look at our budget, we don't have a lot of discretionary money to cut."
