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Faced with unprecedented 50% cut in state reimbursement, counties urge Congress to provide direct aid in stimulus 4

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Tue, Apr 28th 2020 10:00 am

Counties ‘face financial cliff’ in lost sales tax revenue, state cuts & mounting demand for service delivery

By the New York State Association of Counties

Following an announcement from the New York State Division of Budget that budget shortfalls resulting from the COVID-19 pandemic could result in cuts of up to 50% in aid to local governments, the New York State Association of Counties called on President Trump, U.S. Treasury Secretary Mnuchin, the New York congressional delegation and leaders McConnell, Pelosi, Schumer and McCarthy to provide direct support to counties as congressional leaders begin negotiations for a fourth stimulus package.

According to the Division of Budget’s summary, “The scope and depth of the reductions to local aid programs needed to balance the FY 2021 Budget have no precedent in modern times. In the absence of Federal aid, nearly every activity funded by state government in the aid to localities budget ... will face steep cuts.” (Emphasis added.)

These cuts are expected as the COVID-19 pandemic is spiking demand for social services such as TANF, HEAP, child support, child welfare services and adult protective services.

“Local governments are teetering on the edge of a fiscal cliff as demands for services rise and economic activity is at a standstill. Counties are the foot soldiers in the war against COVID-19 and, without direct federal support, they’ll be running out of the resources necessary to continue the fight,” NYSAC President John F. Marren said.

Early estimates project revenues from local sales, which are the lifeblood of local government, are falling off a cliff. Initial projections from the most recent data available show severe declines in retail activity, including:

  • Motor vehicle and parts dealers – loss of 23.7%
  • Gasoline stations – loss of 18%
  • Department stores – loss of 23.9%
  • Clothing and accessories – loss of 50%

These categories of economic retail activity represent some of the largest segments of the economy contributing to sales tax, a major source of revenue for county governments.

“Local taxpayers cannot absorb the loss of this revenue and state aid cuts. As Congress negotiates the next COVID-19 response package, we are asking them to ensure that there is direct and flexible funding for the county governments who are on the front lines of this critical public health and economic crisis” said Albany County Executive Dan McCoy, president of the New York State County Executives’ Association.

NYSAC Executive Director Stephen J. Acquario said, “County governments are facing an unprecedented perfect fiscal storm as severe revenue loss and high demand for social service program are threatening to overwhelm county governments, interfering with our efforts to combat COVID-19. Without help from the federal government in the form of direct aid to local governments, counties simply won’t be able to provide the essential services that are crucial to stopping the virus and reopening our communities.”

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