The county-wide stay at home directives and other measures that have been taken to promote public health during the ongoing COVID-19 pandemic have resulted in significant economic and personal challenges for borough households, businesses, and property owners. After a modest delay, these disruptions to household incomes and local businesses are weighing on the borough’s financial outlook as well. Borough Council and Borough administration would like to summarize these impacts and describe to borough residents and businesses how we are addressing them.

Borough expenses and revenues will both be affected. While some borough expenses may increase because of responses to COVID challenges (many of these are likely to be covered by state and federal reimbursements), and a few expenses may decline, the most significant challenges for borough finances will come from falling revenues, many of which are paid by businesses located in the borough. The figure below shows projected borough General Fund revenue for 2020 by source.* The primary revenue sources for the General Fund are the Local Enabling Taxes (38% for 2020), which include the Act 511 local business taxes, and Real Estate Taxes (36% for 2020).

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Because of the public and individual responses to the pandemic, most business activity has slowed considerably or shut down altogether. This is going to affect the revenue-based business taxes that will be collected by the borough. These Local Enabling Taxes, including Act 511 business taxes, account for the largest share at 38% of the borough’s General Fund revenues in the 2020 General Fund budget.

Because of the forward looking nature of these business tax revenues, these effects will also influence 2021 borough revenues.

The second largest category of General Fund revenues come from real estate tax collections which account for 36% of the borough’s General Fund revenues for 2020. The extent of the negative effects on real estate tax revenues will not be known until late 2020 and through 2021 but they must be planned for now while residents, business and commercial property owners cope with the loss of jobs, businesses, or reverses in other income sources.

The remaining revenue sources in the General Fund will also be negatively affected by COVID-related challenges, such as permit and license fees, real estate transfer taxes, fines, tickets, and parking.

In March the borough, along with most other jurisdictions in the state, extended deadlines for the payment of income, business, and other taxes. Borough Council and Borough administration are continuing to respond to COVID-related fiscal challenges by taking the following steps:

1. Directing borough government department heads – police, public works, administrative office – to review their budgets with an eye to reducing, eliminating, or deferring as much planned spending as possible.
2. Keeping borough overtime payroll costs within these departments to an absolute minimum.
3. Beginning the 2021 budget public process earlier than in previous years to permit necessary consideration be given to the challenges and difficult fiscal decisions that the borough faces.
4. Developing operational scenarios for reductions in the General Fund budget of up to 40% for 2021, with consideration of similar shortfalls in annual revenue for the 2020 budget year.
5. Working with our state and Congressional representatives to monitor and influence potential financial support from possible state and federal relief funds.

Considerable uncertainty still surrounds the borough’s fiscal environment, and Council and the Borough administration will provide new information and details to borough residents and businesses as they become available.

*All of the 1% Resident Earned Income Tax (EIT) goes to Jenkintown School District, while Jenkintown Borough receives Non-resident EIT collections. 50% of Mercantile Tax (MCT) collections go to Jenkintown School District.