Smaller Cities Left Waiting on Coronavirus Aid Money

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Connecting state and local government leaders

“The challenge for 97% of America's cities is that we haven't received any funding yet,” says one mayor.

Rochester Hills, Michigan, a city of about 74,500 people located north of Detroit, still hasn’t received much in the way of federal coronavirus relief funding, according to the city’s mayor.

Mayor Bryan Barnett, a Republican who is the current president of the U.S. Conference of Mayors, argued the circumstances his city now faces underscore the need for another federal relief package, one that will deliver money to smaller-sized localities coping with the unplanned costs and revenue shortfalls brought on by the virus.

"The challenge for 97% of America's cities is that we haven't received any funding yet,” he said Wednesday on a call with reporters.

"My city and my firefighters and my first responders have been locally executing this federal plan with zero support,” Barnett added. “Zero dollars for [personal protective equipment], zero dollars for hazard pay, zero dollars for retrofitting city hall to once again welcome back residents. We have not received any funding.”

Tom Talbert, an advisor in the mayor’s office, later said in an email that the only virus-related federal relief funding the city has received so far came in April, reimbursing emergency medical services providers about $55,000 for revenue losses between March and April.

The city’s general fund revenues in 2019 were about $26.4 million, according to the city’s most recent financial report

There have been at least 8,260 confirmed coronavirus cases and at least 961 deaths in Oakland County, where the city is located, according to state figures last updated on Wednesday.

Talbert explained that Rochester Hills is working to come up with further information it needs to provide to the U.S. Department of Health and Human Services to receive additional funding to offset emergency medical services losses going forward. 

Apart from that, the city is tracking purchases, overtime, “and just about anything we can think of” that is related to the virus response, to submit as part of a request for reimbursement to the Federal Emergency Management Agency in the near future, Talbert also said.

A rub for many smaller-sized local governments is that a $139 billion chunk of state and local government aid in the most recent federal relief package—the “CARES Act”—only flowed directly to localities with over 500,000 people, as well as to state governments.

Leaders in many states and cities of all sizes also continue to chafe over restrictions on how they’re allowed to spend this aid—in particular prohibitions on using the money to replace tax revenue they’ve seen erode as the virus and measures to control it have placed a heavy drag on the economy.

Democrats earlier this month pushed a bill through the House that would provide $875 billion more in aid to states and local governments, including localities with fewer than 500,000 people. The bill would also relax limits on the use of the CARES Act relief fund money to backfill lost revenue.

But since the CARES Act became law with bipartisan support in late March, Republicans have been hesitant to approve another round of federal money to states and localities.

Senate Majority Leader Mitch McConnell said on Tuesday that Congress may need to provide “one more plug” of federal aid to help the nation weather the coronavirus outbreak.

“It won’t be a $3 trillion left-wing wish list like the House cobbled together the other day,” he said. “We’re not going to be doing a $3 trillion bill, that won’t happen.”

As for assistance to state and local governments, McConnell said that “there’s a great reluctance” among Republicans in the House and Senate, “to basically borrow money that will have to be paid back by future generations” that states will be able to use to paper over budget problems that predate the virus.

“If it’s directly related to Covid-19, there may be some additional assistance,” he added. 

Chicago Mayor Lori Lightfoot was also on the call with Barnett and said that rhetoric in recent weeks from Republicans about the possibility of cities and states using federal aid money to fix longstanding budget problems, instead of easing the fiscal stress caused by Covid-19, is a “red herring.”

“I talk to mayors all over my region, Republicans and Democrats, and we're all saying the same thing: 'We're in crisis and we need federal government help,’” she said.

“What's required is trillions of dollars,” Lightfoot added. “And really that can only come from the federal government. There's no city, there’s no state, that has the kind of resources.”

Under the CARES Act, Chicago was allotted $470 million from the Coronavirus Relief Fund. Lightfoot said that restrictions on how the funding can be used mean it has been available for things like purchasing protective equipment for first responders and certain overtime expenses, but “doesn't address the magnitude of the problem” the city is now facing.

"What we need is revenue replacement and the flexibility to plug the holes in our budgets so that government can act as a stimulus and not just be faced with draconian cuts,” she added.

Lightfoot said that she’s been leading weekly calls with about 300 mayors in northern Illinois and that a major concern they have is that there aren’t specific federal guidelines for how larger counties and states, which received CARES Act relief funds, have to go about transferring portions of that money down to municipalities that weren’t eligible to receive it directly.

Though this issue doesn’t affect Chicago directly, Lightfoot added that it would be good if there were time limits on how long states can hold the money for before funneling it down to localities.

Some Republicans in Congress have lodged similar complaints in recent weeks.

“Too many governors are holding those dollars and not passing them down to the smaller communities and counties to help them cover their expenses,” U.S. Rep. Kevin Brady, of Texas, who is the top Republican on the House Ways and Means Committee, said last week. 

“We ought to have that discussion to fix those problems before we add more money to it,” he added.

The National League of Cities has a report that lists 32 states the group said were, as of May 18, “withholding” CARES Act funding “from most municipal governments, including all small and rural municipalities, with no indication when, or if, funds will ever be made available.”

In Wisconsin, one of the states on NLC’s list, Gov. Tony Evers, a Democrat, on Wednesday announced a $200 million grant program for local governments that would use CARES Act funds to reimburse them for certain un-budgeted coronavirus-related expenses.

California is another state that NLC flagged as withholding funds.

But H.D. Palmer, deputy director for external affairs at the California Department of Finance, last week pointed to a budget proposal by Gov. Gavin Newsom that calls for allotting some of the $9.5 billion in CARES Act relief funds the state government received to localities to help them with virus response costs.

This would include $450 million for cities to support homeless services and public safety, and nearly $1.3 billion to counties for public health, behavioral health, and other services.

In Rochester Hills, Talbert said the city has heard nothing about any potential funding from the state of Michigan to local communities. “The state is facing significant financial challenges itself and likely cannot spare any financial resources,” he added.

(Talbert did note that one minor caveat here is that all FEMA dollars first flow through the state's Emergency Management Division before being distributed to the local communities.)

Oakland County is in line to receive $219 million from the CARES Act relief fund, according to figures published by the Treasury Department. County Executive Dave Coulter said last week that the more than 60 cities, villages and townships in the county would have access to $30 million of that sum, the Detroit Free Press reported.

Talbert said that Rochester Hills was aware of this, but has yet to receive any funds from the county, and has not heard yet what sorts of restrictions the county may place on how smaller local governments can use any money that it does share.

Bill Lucia is a Senior Reporter for Route Fifty and is based in Olympia, Washington.

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