A Prolonged Shutdown Will Hit Counties With Tight Cash Flows Hardest

Mitigation steps county government leaders want to see move forward to prepare for wildfire season out West are on hold due to the federal shutdown.

The Washington State Association of Counties has made prevention of catastrophic wildfires a legislative priority in 2019, Executive Director Eric Johnson told Route Fifty, but its congressional delegation can only do so much.

Federal Emergency Management Agency contracts and Forest Service personnel are currently unavailable for stewardship projects that can help prevent wildfires like thinning, the process of removing slower-growing or defective trees to allow growing room for healthy ones.

“We know fires are going to occur, but how do we ensure it’s not a catastrophic wildfire season like we’ve had?” Johnson asked.

Due to the partial shutdown, FEMA is only able to provide programs and services that directly protect life or property or that are funded under non-expiring appropriations.

Local governments largely haven’t dealt with any dramatic effects from the partial government shutdown that has seen hundreds of thousands of federal government employees across the country furloughed, officials here in Washington, D.C., said Thursday. But county leaders attending the National Council of County Association Executives conference warned that local governments dealing with tight cash flows are at greatest risk the longer the funding hiatus lasts.  

The Department of Agriculture has also been hit by furloughs in ways counties are starting to see. Loan officers have been sent home, leaving agricultural communities hanging, said Julie Ehemann, a commissioner in Shelby County, Ohio.

President Trump promised farmers $12 billion in subsidies, after starting an international trade war with China, but the checks have stopped flowing for some.

County executives are also keeping their eyes on safety net programs that help the poorest in their communities. USDA funded the Supplemental Nutrition Assistance Program through February, but it’s become “a moving target for a lot of folks,” said Mary Ann Borgeson, a commissioner in Douglas County, Nebraska and first vice president of the National Association of Counties. The same is true of the Women, Infants, and Children program, which the federal agency has also said will be kept going through next month..

“Short term, I don’t think [the shutdown] has been significant,” Johnson said. “If we continue long term, cash flow is a real issue for certain jurisdictions that are floating dollars with the hope of getting WIC reimbursement.”

If the shutdown bleeds into construction season on major transportation projects costing $2 million or more in small, rural counties, “that’s a cash flow nightmare potentially,” Johnson said.

Ehemann, from Ohio, noted that her county’s jail houses federal prisoners and as of now, reimbursement checks aren’t coming. “We worry about other grant situations that are reimbursement grants. Where’s that money coming from? When will you get it?,” she said.

Washington has three national parks with winter recreation, and their closure is impacting businesses in gateway communities and potentially tax revenues, Johnson said.

“County government, particularly our smaller ones, we’re running a business,” he added. “And stability and certainty of what our partners deliver to us is really important.”

A Moody’s Investors Service report this week also flagged potential issues for transit systems, particularly with their credit ratings.  Transit systems have weathered previous shutdowns with internal liquidity, external lines of credit and accelerated borrowing for capital, but a record-length shutdown would be a credit negative, the report said.

Federal grants provide up to 20 percent of operating revenues and the majority of capital funding for some systems, while the New Jersey Transit Corporation is among those with outstanding bonds repaid by federal grant reimbursements.

“With nearly 90 percent of Federal Transit Administration staff furloughed and most of its programs closed, U.S. mass transit systems have temporarily lost financial aid that supports a wide range of needs, from daily maintenance and service to ongoing repair and expansion projects,” report stated.

But many systems receive a large portion of their operating aid in the early spring, so the shutdown has not delayed that yet.

Affordable housing advocates have also noted potential problems for tenants dependent on federally-financed vouchers, with the Department of Housing and Urban Development acknowledging more than 1,000 contracts with landlords have expired. In a letter this week, the Campaign for Housing and Community Development Funding urged a resolution of the shutdown, saying it leaves people who depend on housing vouchers vulnerable to eviction.

“It’s funny, you don’t hear about city governments, or state governments or county governments shutting down; we’re there 24 hours a day,” said Greg Cox, a supervisor in San Diego County, California and NACo president. “So it’s kind of an interesting approach to government.”