CECIL COUNTY — Economic impacts are being felt county-wide as a result of the COVID-19 virus, but thanks to planning on the part of county officials, Cecil County could be primed to weather the storm better than other counties in Maryland.
Recently, Cecil County officials were forced to lower projected income tax revenues for their 2021 budget in direct response to information they received regarding the filing of unemployment claims in Cecil County.
Cecil County Budget Manager Rebecca Anderson said that specifically, the March 21 numbers of new unemployment claims got county officials rethinking their initial budget projections.
Cecil County Economic Development Director Chris Moyer said the initial unemployment claims in the county for March 21 totaled 665 claims, this was followed by 987 claims the week of March 28 and 1,174 claims the week of April 4, for a three-week total of 2,826 claimants, or 2.19 percent of Cecil County’s workforce.
“Cecil County rates are doing well within the context of the rest of the state,” Moyer said. “That is evidence of the jobs Cecil County has been able to retain.”
One of the reason’s for this, Moyer told the Whig, was that Cecil County, being midway between two large metropolitan areas was diversified economically to the extent that both markets could be leveraged to help keep the local economy running smoothly.
Local companies help job retention
Moyer touted the companies that are currently considered essential services and which are continuing to produce necessary items such as W.L. Gore & Associates, Terumo Medical Corporation and Northrup Grumman Corporation, as one of the reason’s Cecil County has the lowest percentage of unemployment claims in the state.
“All three (companies) are creating equipment for national defense or medical supplies,” he said. “All have been able to continue to be fully operational.”
Moyer also touted the county’s new logistics management firms and food distribution entities such as KeHe Distribution Center, Smithfield Foods, the Lidl Distribution Center, Medline and Amazon.
“All are aggressively hiring right now,” he said. “That amounts to over 1,000 jobs.”
He said one of his hopes would be to steer some of those who recently filed for unemployment to the open jobs at the various logistics firms.
Industries suffering as a result of COVID-19
Moyer did note that several businesses throughout the county were suffering due to the viral outbreak.
“Some industries have been rocked,” he said. “The small business community, store fronts that haven’t moved into online sales, some restaurants and bars are really struggling.”
Moyer said a lot of farms in the county are struggling as well, including the county’s wholesalers. Specifically he referred to mushroom growers, dairy and cattle farmers as well as grain and chicken farmers as several areas that have been particularly hard hit by the virus.
“We know of dairy farms that are literally pouring milk down the drain at the farm,” he said. “We have cattle farmers who are struggling to get livestock to the butcher.”
Moyer said chicken farms are seeing longer layoff between flocks because demand for chicken is down due to closed restaurants and institutional entities such as school systems.
Some farms however are actually doing quite well at the moment, specifically the direct to consumer farmers, Moyer said.
“We have seen a shift in home delivery and cooperation among the farmers in the retail sector, they have basically created a virtual food hub,” Moyer said noting that many are busier than normal, but they also worry about what will happen when the current increase in sales die down.
County works to stem job losses
In order to help stem job losses, Moyer said the county is not currently marketing externally to bring in outside businesses at all, but is instead is working to help existing businesses. It is doing so by not only checking in with the county’s larger employers, but also by establishing a virtual town hall with the small business community. The first such town hall having attracted 230 participants.
The county has also enacted a grant program through an executive order by County Executive Alan McCarthy, dated March 30, called the Cecil County COVID-19 Small Business Emergency Micro Grant Program, which assists local businesses with 25 employees or less with up to $10,000 per business for working capital to support payroll, rent or mortgage payments, materials, utilities or other similar expenses.
As of Friday morning, Moyer said the program has received 100 applications and that decisions would be made this week as to which businesses would be receiving money.
“We are one of only three counties in the state that have small business relief related to COVID-19,” he said, adding that most counties around the state were playing a wait and see type approach. “We didn’t want to hold our breath, businesses are struggling now, they can’t wait to see what happens, they need our help as soon as possible.”
In the same executive order, the Cecil Catalyst loan program was also instituted, allowing for interest free loans up to $15,000 for a period of one year.
Moyer said these programs are meant to help keep businesses alive in Cecil County and allow businesses to be able to dig out of the financial issues the COVID-19 virus is creating for the local economy.
Virus affecting the county’s bottom line
The ongoing COVID-19 issues have already significantly affected the county’s 2021 proposed budget as the original budget was written down by $2.3 million with respect to the county’s anticipated income tax revenues.
Anderson said that county officials felt that in looking at the possible economic impacts of COVID-19, the proper thing to do would be to write down the income tax revenue projections. She noted that the initial figures presented on April 1 did show an increase from the FY2020 budget, but that this increase stems from the disparity grant the county receives from the state.
In discussing the ongoing economic situation created by COVID-19, Anderson did note that if county officials had to present a budget at the present time they would probably scale back the income tax projection even further.
The county also recently implemented a hiring and budget freeze for the FY2020 budget as a result of COVID-19.
Income tax numbers paint sobering picture
Comptroller Peter Franchot and Andy Schaufele, director of the Bureau of Revenue Estimates painted a grim picture for sales tax revenues for the State of Maryland if the COVID-19 shutdowns proceed through the end of June during a Friday virtual press conference.
According to calculations made by Schaufele, it is estimated that the state will lose $2.8 billion in general fund revenues, which is 15 percent of the state’s total revenue numbers. The loss of income tax revenues would be just shy of $1 billion, while sales tax losses would also be around $1 billion.
Income tax withholding accounts for 45 percent of the state’s overall general fund revenues, while sales tax accounts for 25 percent of general fund revenues.
According to Schaufele, the loss in income tax revenues amounts to 22 percent of the state’s overall income tax receipts, while the loss in sales tax would be much steeper, at a loss of 59 percent or around $250 million in lost revenues per month. These losses would significantly impact local governmental entities who rely on sales tax revenues for their own general fund accounts.
The projections are based upon the anticipated losses attributed to job losses and the closure of many businesses as a result of the COVID-19 virus. During a three week period, 240,000 Marylanders filed for unemployment benefits throughout the state, Schaufele said.
“We are seeing levels of unemployment that exceed those of the great recession (2008-2009),” Franchot said, adding that the economic recovery from COVID-19 will be long and difficult. “Unlike what some people are saying, the economy is not going to be switched on like a light bulb, it is going to take years.”
Both Franchot and Schaufele said that local governments will be affected significantly by the loss in income and sales tax revenues, although neither could say specifically how local governments might be impacted.
“We do not know, when it is going to end, and we don’t know what all the revenue impacts are going to be,” Cecil County Executive Alan McCarthy said. “My hope is that this ends far sooner than what they are predicting right now, but we have prepared a budget which is flexible, conservative, which will allow us to provide the necessary services without interruption going forward.”
He added that current capital projects will be dealt with on an as necessary basis provided the revenues are available and that projects the county currently has on the books will be completed. He said county officials will continue to monitor the numbers, specifically as they relate to revenues as the county moves forward.