“Extraordinary times call for extraordinary measures.” These are indeed extraordinary times with many businesses forced to close and millions of people out of work due the measures necessary to contain the Coronavirus pandemic. And municipalities like Newtown Township that depend upon business and job related taxes face financial difficulties if the shutdown continues and people do not get their jobs back. It is unknown to what degree the COVID-19 shutdown will affect the Township's finances. Obviously, Earned Income Tax (EIT) Definition will likely take a hit due to the temporary or permanent closure of businesses. Real Estate Transfer Tax Definition will also likely be, or become, compromised as people brace for a potential financial impact. In addition, charges for public safety (permits) may decline if building and construction drop off, and the township's Parks & Recreation programming revenue stream may be significantly less if the township has to cancel summer camps. Continues... These are major sources of revenue that fund the day-to-day operation of the Township as well as projects such repaving roads, which may be cut back to save money. Also, Keystone Collections, which manages municipal and school tax administration, collects local EIT Taxes. Keystone extended the Individual filing deadlines to match the State and Federal date of July 15, 2020. This delay in collecting EIT will also negatively impact Newtown Township’s ability to carry out needed services. Given that many Newtown Township residents and non-residents who work in Newtown may be laid off for weeks, if not months, it is likely that Newtown will take a hit on EIT revenue in 2020. How much of a hit is uncertain at this time. But as little as a 10% reduction in EIT (see chart) could mean bad news regarding the township’s fund balance and consequent bond rating. |