COVID-19 shutdown leaves Benton Harbor with $437,000 deficit

BENTON HARBOR, Mich. -- Benton Harbor is one of many cities in Michigan taking a financial hit from COVID-19, as the city is now facing a $437,721 deficit.

City officials say this is circumstantial and the loss of one tax hit them hard.

“Whirlpool — about $900,000 in income tax,” said Mayor Marcus Muhammad. “And now everybody’s working from home, so that affects us, when you’re talking about 4,000 plus employees on Main Street no longer there.”

Mayor Muhammad saying one thing that really benefited Benton Harbor is the new income tax. The city gets a 0.5 percent tax from non-residents who work in the city — but with people now working from home — they’re losing that revenue.

And that’s not the only area where they’ve suffered losses.

“Through our finance department we found that the $437,000 was a result of less income with the tax revenues, it was about $250,000. Then, $100,000 that we have to take away because the state has alerted us that the state share revenue will be reduced,” said Mayor Muhammad.

All of this, hitting at the same time the city was hoping to add eight more positions.

Now, their focus turning to avoiding layoffs and cuts.

“We’re looking at retaining stuff, we have to look at our sanitation contract, we have the cemetery - which that management contract expired, parks are coming back,” said Mayor Muhammad.

But there is good news.

A $5.6 million rainy day fund that the Mayor says will help, as the state is projecting lower funding to cities as well.

The Mayor also assuring residents that necessary services will still be provided and they will continue to see the city government working for them.

“We certainly want for our brother and sister what we want for ourselves.”

The city has to submit its budget for the 2021 fiscal year by July 1.

Before that, officials will meet Monday to go over that plan in depth and try and find some savings.