Interest rates drop; county to get less funds
WARREN — Interest rates are so low, Trumbull County’s investment earning projections are plummeting, and the state intends to further cut the amount of money it sends to the county in local government funds.
While the county expected at the beginning of the year to generate $1.4 million in investment earnings, which are used to supplement the county’s budget, county Treasurer Sam Lamancusa said he now expects to receive half of the original prediction — $700,000. However, that figure is expected to decrease again as the year goes on, Lamancusa said.
“Interest rates have been falling off the cliff since COVID. When interest rates are down, the money that we invest through our portfolio to earn interest every year doesn’t perform well,” Lamancusa said.
In the bond market, the best return rate offered is about .06, down from about 2.05 at the beginning of the year, Lamancusa said.
“Money can’t make money now because federal interest rates have fallen so low,” Lamancusa said.
“We’re stuck with this until the markets change, until the entire world economy changes,” he said. “Everyone is facing this scenario.”
County Commissioner Frank Fuda said the news makes another state cut to the county’s local government funds even more disconcerting.
Around this time each year, the state reaches out with calculations showing how much local governments will receive in funding from the state, said deputy Auditor Debbie Santangelo.
The figures show the county is positioned to receive $1.2 million less in January than it received last year, Santangelo said.
“They are cutting $1.2 million from us. This was unexpected,” Santangelo said.
The state steadily has been reducing the amount of money it provides through local government funds over the past several years. Fuda said although the state keeps most of the sales tax collected in Trumbull County, the county gets less and less in return from the state. Consumers pay a 6.75 percent sales tax rate in Trumbull County, but the majority of the revenue from the tax is sent back to the state. Columbus takes 5.75 percent and Trumbull County takes 1 percent of the funding for its general fund budget.
Sales tax collections are down, too, Santangelo said.
In June 2019, the county took in $2.196 million during the month of June — for sales made in the preceding months. This year, the county collected $325,515 less in June, she said.
The county also took in $210,925 less in July than the $2.041 million it collected in 2019.
A meeting is scheduled for 10 a.m. Monday to discuss alternative budgets for the rest of the year, Santangelo said.
Commissioners instructed departments earlier this year to cut their budgets by 10 percent and are only hiring for essential positions.