Capital Budgets and Maintenance in Line to Take Hits, Local Government Survey Finds

Like many local governments across the country, Oakland Park, Florida, a city of about 45,000 residents north of Fort Lauderdale, has looked for ways to save money since the coronavirus outbreak tanked the economy and undermined tax revenues.

The public works department, with a staff of about 80 people, is among the city agencies that dialed back spending, reducing employee work hours and pushing off capital and maintenance projects, like upgrades and improvements to parks. 

While the department isn’t in crisis, its director, Albert Carbon, said that it is beginning to feel the pinch of the downturn, especially when it comes to areas like maintaining the city’s vehicle fleet. 

He’s also concerned about what lies ahead—in particular with street funding, given that fewer people have been driving and gas tax revenues are apt to be down. “What are we going to do with our streets going forward?" he said. "We have enough money this year. But what about in 2021 and 2022 when there's no money?"

The findings in a new poll of local government officials indicate that the situation Carbon described in Oakland Park is not unique. 

The “Local Government’s Next Normal” survey, a joint project between the Atlas, Engaging Local Government Leaders and SeeClickFix, suggests that capital budgets and facilities maintenance are areas that are in line to take significant hits due to the virus-driven downturn, and that staff cuts could fall hard on public works departments.

Respondents to the survey included 386 local government officials and staff from across the country. About three-quarters were from municipalities, but some with counties, states, tribes and utilities weighed in as well. Notably, the survey captured views from leaders in small and mid-sized jurisdictions, with 68% working for organizations that serve under 100,000 people.

Just over 60% of respondents said capital projects would be the budget item most impacted by revenue shortfalls stemming from the virus. Among people in leadership positions, the share of respondents who said so was even higher, at 69%.

Looking back to six months ago, 52% of respondents said facilities maintenance was one of their organization’s top three priorities. Only 28% predicted that it would be a year from now. 

When it comes to staffing, nearly one-third of respondents said that public works was being affected by workforce cuts, like layoffs, furloughs and eliminating positions through attrition.

And while about three-quarters of those polled said their government would adopt more software to streamline public services going forward, only 15% expect investments in software and technology to support asset management or facilities maintenance in the next year.

"If you're looking at infrastructure broadly and the challenges that the U.S. faces, this is not a good thing for the infrastructure portfolio in the United States,” Elle Hempen, CEO of the Atlas said as she discussed the survey results related to capital investment and asset maintenance.

The American Society of Civil Engineers in 2016 estimated the nation had an infrastructure funding gap of about $1.4 trillion over a decade. Experts have warned that deferred infrastructure maintenance could be a ticking financial time bomb for states and localities that are failing to keep assets like buildings and sewers in good repair.

Around the country, there are examples of public works that are in poor condition, or that are outdated or inadequate.

Take the railroad tunnel under the Hudson River between Manhattan and New Jersey that is more than a century old, was damaged during a severe 2012 storm, and is along a corridor that in normal times handles about 450 trains and 200,000 passenger trips per day. 

Or the lead pipes that carry water to thousands of homes in Chicago that will take an estimated $8 billion to $10 billion to replace. Or the ailing water systems that serve remote areas in West Virginia coal country. Climate change and sea level rise, meanwhile, threaten to put additional strain in the years ahead on aging waterworks that carry waste and storm water.

And as people work and attend school remotely during the coronavirus pandemic, it has drawn renewed attention to the fact that millions of Americans—somewhere between 21 million and 42 million based on recent estimates—lack access to broadband internet.

President Trump, along with Democrats in Congress, have voiced support for some sort of sweeping new infrastructure investment package throughout the president’s time in office. But the idea has never gained serious traction on Capitol Hill, with a lack of consensus between Republicans and Democrats over where the money for such a program would come from.

Carbon said if new state or federal dollars for infrastructure were to flow to Oakland Park as part of a coronavirus recovery package, he could use the money for pending stormwater and wastewater projects that could otherwise wait two or three years for funding. 

“If I can get some money, I can put some contractors and people to work,” he said.

Putting people to work on infrastructure projects may be an attractive idea in some quarters at a time when the July unemployment rate was about 10% nationally and just over 11% in Florida.

But Democrats and Republicans in Congress have been at an impasse trying to reach agreement on a new coronavirus relief bill. Whether the legislation should include a major infusion of federal aid for states and localities is a sticking point. Democrats support providing state and local aid, while Many Republicans have resisted that idea. 

Even when discussions about the legislation were more active, there were no signs it was going to include a significant new infrastructure investment program.

In the meantime, Carbon said his department is making due, cutting projects like upgrades to playgrounds and restrooms at parks and putting off the replacement of a dog park fence. 

Capital and maintenance budgets tend to be lean in normal times, Carbon said. He said his agency lacks dedicated funding for things like replacing air conditioners, even though in the past couple years about 25 of them in buildings the agency oversees needed to be replaced.

Public works—like other city agencies in Oakland Park, apart from the fire department—have reduced the time that employees are working, and the wages they receive, to 72 hours every two weeks, with employees required to take every other Friday off without pay. 

The arrangement is helping to save money so that people don’t lose their jobs, Carbon said. 

But, seven months into the pandemic, he said his department is starting to see the effects of these operational reductions, especially with his four mechanics who maintain a city fleet of about 70 vehicles that include garbage trucks, fire engines and golf carts.

“I cut 10% of their time,” he said. “Now I'm feeling the pain of that preventive maintenance that wasn't being done.”

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