County leaders across New York have renewed their plea for federal lawmakers to pass a coronavirus relief bill to provide aid to state localities.
County executives along with the state and national Association of Counties are calling on congressional leaders and the president to compromise on a new federal stimulus package to fund states and local governments. Negotiations on two different bills proposing federal aid began Monday.
States, counties and local governments need direct and flexible coronavirus stimulus funding to address depleted resources, state aid cuts and reduced sales tax revenue, according to a July 24 report from the New York State Association of Counties.
Not looking for a bailout
GLOW region officials have said they have done all they can to reduce expenses, but face millions of dollars in lost revenues from sales tax, a decline in occupancy taxes, the loss of gaming revenue, and potential state aid cuts as they begin the 2021 budget process amid a lot of funding uncertainties.
Genesee County Manager Jay Gsell said the federal government needs to come through with another stimulus bill “the day before yesterday.”
“Town and county 2021 budgets are being developed now. Time is of the essence,” he said, adding that the issue can’t wait until after the Nov. 3 general election.
Gsell said the COVID-19 pandemic and resulting economic slowdown “have devastated county budgets on a scale not seen since the Great Depression.”
Livingston County Administrator Ian Coyle said his county has made a series of adjustments with more possible – up to $6 million worth – to handle 2020 budget impacts on a monthly basis, but that the 2021 budget – a planning process that is just beginning – is unknown.
“For 2021, it will be a curtailed budget for sure,” said Coyle.
Orleans County Legislature Chairman Lynne Johnson said the increased expense from COVID-19 “has pushed us to the breaking point.” She said without aid, counties will be forced to make cuts, including to programs for residents, which will worsen the economic recession and slow counties’ progress against the coronavirus.
Orleans County is not looking for a bailout, Johnson said.
“We’re simply looking to have the revenue lost and unexpected expenses of coronavirus covered,” she said. “There is no more that we can cut. All counties are at bare bones right now. Over the next 12 months, we are looking at sales tax losses.”
Coyle suggested that a “practical, reasonable and politically (on both sides of the aisle) justifiable methodology would be to have a non-partisan Government Accounting Office type group attest to a state, county or city’s COVID-related revenue impact and have the federal stimulus package being considered use that figure as a base number.”
“So, ours would be related to sales and hotel/motel tax losses and possibly state aid cuts. Nothing more, nothing less,” Coyle said. “Then, you don’t have the politics and ‘we are bailing out your prior year budget problems’ debates you see playing out on the national stage.”
The NYSAC report projects revenue losses for the GLOW region of $28.2 million – in a milder scenario – to $49.4 million - in a severe scenario, for 2020, and $8 million to $24.8 million for 2021.
Among individual counties, the losses range from $9.1 to $14.1 million in 2020 for Genesee County, $9.3 to $17 million for Livingston, $4.2 to $7.7 million for Orleans, and $5.6 to $10.6 million for Wyoming.
For 2021, the losses range from $2.3 to $7.1 million for Genesee, $2.3 to $8.5 million for Livingston, $1 to $3.9 for Orleans, and $1.4 to $5.3 million for Wyoming.
Sales tax, state aid worries
For many counties, sales tax is the largest source of revenue that can be used for any county expense. Sales tax revenue began the year strong, with many counties exceeding budgeted revenues for sales tax in January and February, but as the pandemic took hold, that revenue declined.
Orleans County’s sales tax revenue on second-quarter sales was $4,704,000, or $646,000 less than it was for the second quarter of 2019.
Livingston County, which typically takes in more than $34 million annually in sales tax revenue, saw second-quarter sales tax revenue of $7,594,303, which was down $1,107,254, from the year before, according to county data.
Coyle estimated the county would lose about $2.8 million is sales tax for 2020.
Counties are also watching funding from Albany, which could be reduced. New York State projects a $13.3 billion shortfall this year, and roughly $61 billion over four years, because of the COVID-19 pandemic. The projection does not address cuts in state reimbursement.
Gov. Andrew Cuomo has repeatedly warned of widespread 20 percent cuts to state health care, education, and localities if New York does not receive federal funding. That would mean additional millions in lost funding that counties would need to make up.
Johnson noted that Cuomo “did, in his budget, say he would balance the state budget on the cuts he makes to local counties.”
Coyle estimated that a full 20 percent cut to state aid for Livingston County would represent $4 million to $5 million.
“In the present year, we will make moves to adjust other funds, draw on reserves, make cuts to make up the difference,” Coyle said, basing those actions on a total budget impact of $6 million. “If it’s more, then we will have a deficit or will eat into the fund balance.”
Livingston County has introduced an early retirement incentive that Coyle said he hoped would save more than $500,000 for the 2021 budget, and that an 8 percent reduction in the county’s health insurance premiums will also help the overall budget.
He also hoped the county, which created a dedicated COVID expense tracking county and “has spent a considerable amount from,” would be able to reimbursed for those expenses through the Federal Emergency Management Agency.
Meanwhile, U.S. Senate Republicans have taken their time negotiating a $3 trillion federal HEROS Act coronavirus relief package that House Democrats passed in May that would provide direct funding to state and localities. Negotiations are continuing, with federal lawmakers scheduled to enter recess on Aug. 7.
U.S. Senate Majority Leader Mitch McConnell, R-Ky., has pushed back against federal aid for state and local governments since governors’ first call for assistance in April. He suggested states file for bankruptcy.
Dutchess County Executive Marcus Molinaro, a Republican who ran against Gov. Andrew Cuomo in the 2016 election, advocated for federal lawmakers to send aid to counties last month.
“A month ago, there were fewer counties across America who were stretched to thin,” Molinaro said. “It was almost easy for our friends in the United States Senate to suggest this was New York’s or New Jersey’s problem. I can’t imagine that Sen. McConnell and the Republican majority, who are perhaps not as populated as New York or as hard-hit early on, I can’t imagine they would leave those counties to fend for themselves. [Counties] are the tip of the spear – we are the front lines of this response.
“What’s next? Significant cuts to real services.”
Gsell, the Genesee County manager, and Genesee County Legislature Chair Rochelle Stein said the state’s congressional delegation appears united I pursuing direct aid to states and all other levels of local governments based on population.
“The New York State delegation understands our measures of savings, deferrals, delays, cuts, labor furloughs/positions, freezes, etc.,” Gsell said.
Genesee County initially froze more than 40 positions. Six of those have been unfrozen based on specific departments needs and the resumption of some county services.
Without federal aid, Gsell said, the county will most likely continue frozen positions and furloughs and continue austerity measures for the rest of the calendar year – which will set the stage for more of the same for the 2021 county budget.
And even with federal aid, details will determine what a counties would expect dollar-wise and, combined with the loss of sales tax and state aid cuts, and whether or not a tax-cap override, more workforce dislocations or delays in capital projects would be needed, Gsell said.
Stein said local governments need to have knowledge of the details for calculation of the stimulus to determine the risk from state cuts before local governments have to set budgets for 2021.
“Once we know when the stimulus-direct flexible aid is forthcoming, we can adjust cost saving measures,” Stein said. “At this point, we are not using a crystal ball to make a fiscal 2021 plan, but basing our actions on known facts. We are asking our fellow elected leaders to have patience, stand strong and wait with us, because we are all in this together.”
Johnson Newspaper Corp. reporters Kate Lisa and Melanie Lekocevic contributed to this story.