Most people can count on a $600 check from the $900 billion COVID-19 relief package Congress passed late Monday night. The unemployed will receive $300 more in benefits, even Amtrak gets $1 billion.
But city and parish governments, suffering from depressed sales taxes and higher expenses, get nothing.
Local officials still harbor hopes that Congress will try again soon to help out the entities that hire cops, collect trash, deliver drinking water, and handle sewerage.
What they know for certain is that without help, local governments will be laying off employees and ratcheting back services. Some municipalities could face bankruptcy. And, in a top-down state like Louisiana, state government will be called on to help, leading to budget deficits counted in the hundreds of millions of dollars.
“We were hoping to get in on this round of funding,” said Guy Cormier, executive director at the Police Jury Association of Louisiana.
Earlier this year, locals were told to be patient when the first $2 trillion CARES Act stimulus, which included money to reimburse local government spending on the pandemic, went through Congress.
“We were told that this next round of funding would include monies for loss of revenues and now they’re not going to include anything for us, period,” including expense reimbursement, Cormier said.
Orleans Parish already is cutting back firefighter hours, he said. “And in other parishes, the folks I’m talking to are saying if we can’t get any relief in next year’s numbers with budgets being so tight, they’re going to have to look at furloughing more people,” Cormier said.
“We still have $430 million in CARES Act applications (from local governments) that were approved but couldn’t be funded, so that shows there’s a great need out there,” said John Gallagher, executive director of the Louisiana Municipal Association.
The mayor of a Tangipahoa Parish village blocked the town’s Board of Aldermen from holding a meeting, adding to an already bitter division bet…
“I actually laid off 34 individuals – and they’re not going to be rehired – in anticipation of falling revenues,” said Pineville Mayor Clarence R. Fields, a town of 15,000 on the Red River near Alexandria. “We also cut 30 more positions out of our budget.”
Pineville had 280 positions prior to the pandemic – about half of them were firefighters and policemen, though only four vacant public safety positions were removed. The rest came from the service sector and administration, with town merging departments. That has led to some slowdowns in services, but Fields said the main impact has been on facilities and special events.
“Anything that could have been sent to local government would have been a big help. Local government will face some challenges in this upcoming year of 2021 and we’ll have to overcome those challenges,” Fields said.
Moody's Analytics, one of the Wall Street firms that set interest rates for government borrowing, projected state and local governments nationwide will face a total shortfall ranging between $330 billion and $470 billion through fiscal year 2022.
Small towns and mid-sized cities in Louisiana already were suffering financially prior to the pandemic with their populations moving to bigger cities.
Louisiana Legislative Auditor Daryl G. Purpera is responsible for keeping up the finances of Louisiana towns and villages. His office keeps a list of the fiscally distressed towns with the biggest financial problems. That list contains 15 towns now, but Purpera said by next week when the list is expected to grow to about 22.
But that doesn’t mean big cities haven’t felt the brunt of the COVID-19 pandemic, which has required business shutdowns to slow the spread of the highly contagious and often deadly virus.
Despite experiencing revenue declines and increased expenses, East Baton Rouge Parish, which has a diverse economy, haven’t had to lay off or furlough employees.
“We have had to use a portion of our emergency reserves to offset revenue declines to balance our budgets in 2020 and 2021,” Mayor-President Sharon Weston Broome said. “We have also deferred capital purchases and continue to have COVID-19 related expenses. Any additional federal or state funding that we receive will help us to continue to provide services to our citizens at current levels, replenish our reserves, make necessary capital purchases, and cover the additional COVID-19 related expenses.”
“Local governments across the state are in dire need,” Lafayette Mayor-President Josh Guillory wrote Dec. 14 to U.S. Sens. Bill Cassidy, R-Baton Rouge, and John N. Kennedy, R-Madisonville, asking that the talked-about $160 million for local governments stay in the legislation.
Between Hurricane Laura and the coronavirus pandemic, times are tough for many families in Louisiana.
Congress not including local governments in the relief package also will have a significant impact on the revenues available to the state to pay for services. “The state ultimately subsidizes and assists many local governments,” said state Rep. Jerome “Zee” Zeringue, the Houma Republican who as chair of the House Appropriations Committee is in charge of the state’s budget.
The exact amount of the shortfall – and estimates have floated between $600 million to more than $1 billion – won’t be set until the Revenue Estimating Conference, probably after the New Year, certifies how much money can expected from taxes, fees, and royalties.
The congressional package provides some relief for schools, transportation, and employment. The REC had been waiting for the congressional package numbers to allow state economists to figure out how that money can be used.
Will the state be able to bail out cities and towns that go bankrupt?
“How are we going to bail them out, city after city? You can’t. There’s not enough money. The state’s already strapped,” said state Sen. Bodi White. The Central Republican heads the Senate Finance Committee.
“Some cities are going to be in trouble. And if they don’t start cutting, and a lot of them have cut nothing, they’re going to be in deeper and deeper.”