There can be little doubt that the economic effects of the COVID-19 crisis will pose historic challenges to municipal governments across in North Carolina, though their true scope may not be known for months.
Restaurants, hotels and retailers of all types have been forced to close their doors or limit operations and hours, whether due to Gov. Roy Cooper’s stay-at-home order or simply as a result of people not frequenting businesses to avoid contact with others and lessen the chance of contracting the virus.
As this crisis began, cities and towns dealt with the immediate effects and the public health concerns. That meant taking new steps to protect workers engaging with the public while providing crucial services; having first responders ensure that residents were gaining access to needed health care; and policing stores and other places where people gather to ensure that required social-distancing measures were enforced.
Addressing those immediate effects took priority. But it was obvious that cities and towns would be hit with another challenge created by the crisis: drops in revenue required to pay for crucial services for residents.
Sales taxes, utility payments and hotel occupancy taxes are among the revenue streams likely to see substantial drops in relation to the struggles being experience by retailers and other businesses.
Anticipating those revenue impacts, NCLM staff and the Board of Directors began strategically working in March to put those needs before state and federal policymakers ahead of consideration of legislation addressing the COVID-19 crisis.
Those efforts began in mid-March with letters to Gov. Roy Cooper and legislative leaders outlining general needs.
League President William Pitt, writing on behalf of the Board of Directors, stated: “For employers with smaller workforces and smaller operating margins, particularly retailers, surviving weeks of reduced or non-existent income streams is simply not feasible,” said Pitt. “These businesses will need help to survive.”
The letter then noted that, just as state government depends on sales tax revenue generated by these businesses, so do local governments. “Cities and towns receive $1.2 billion annually in sales tax revenue, with that revenue stream representing more than 25 percent of many of their budgets,” Pitt noted. “On the expense side, public safety makes up the largest portion of non-utility municipal operating budgets, and it is those personnel that we will be relying on heavily in the weeks ahead.”
Two weeks later, League Chief Legislative Counsel Erin Wynia reiterated those needs before a House select committee formed to address the COVID-19 crisis. That presentation was followed up with specific requests for cities and towns in a letter from Rose Vaughn Williams, Associate Executive Director of Government and Public Affairs. The letter noted that “the crisis and the strains that it is creating across society are changing daily, and it is difficult to predict how the challenges of cities and towns will change.”
The requests:
- Appropriate $60 million each month to municipalities for April, May, and June, as a way to offset anticipated lost sales tax revenues as a result of mandatory business closings and social distancing measures.
- Make available $50 million in interest-free loans to municipalities to aid with cash flow challenges created by the deferment of sales tax payments, with loans repayable later this calendar year as deferred sales tax revenues are received.
- Make available $100 million in new grant funds to help local government water and wastewater utilities meet cash flow needs due to the mandates of Executive Order 124, reduced commercial usage, and other potential losses of revenue due to the ongoing pandemic.
- As vehicle registrations are deferred and delayed, continue to allow property taxes on those vehicles to be collected on schedule. Clarify the state Public Meetings Law so that councils can meet remotely, protecting the health of the public and meeting requirements of stay-at-home orders.
- Approve and incorporate the NC FIBER Act into any relief package to assist residents working from home and school children doing work from home with better broadband availability.
NCLM staff then organized and held virtual conference briefings for each of the four legislative party caucus – House Republicans, House Democrats, Senate Republicans and Senate Democrats.
While state lawmakers in Raleigh were busy assessing how to respond to the COVID-19 crisis, Congress was moving ahead with legislation in March and April. In response, the League formulated a federal advocacy strategy, which included individual meetings and contacts between NCLM leadership and the White House and N.C. members of Congress; formal letters to those same parties; and virtual town hall events for NCLM members and members of Congress. There were also calls between members of Congress, their senior legislative staff and the Public and Government Affairs team.
To help facilitate advocacy work, the PGA staff created a new weekly advocacy-focused virtual briefing for members, Advancing Advocacy, each Thursday afternoon. Those briefings included not only a review of staff advocacy efforts, but tips on member interaction with policymakers, including providing talking points to make the case.
The effects of these advocacy efforts, and those that continue, will only be known in the weeks and months ahead.
Congress, in April, passed the CARES Act, which directed more than $150 billion to state and local governments nationwide, but a majority of that money was restricted to direct COVID-related expenses and did not address backfilling any revenue holes. Even so, the discussion shaping up over the next round of federal legislation had those local revenue needs at the forefront of the debate.
State legislators, as of this writing, were set to address immediate COVID-19 needs, including clarifying remote meeting authority for government meetings. Larger budgetary effects were more likely to be considered in the summer, as the revenue picture and the economic consequences of COVID-19 became clearer.
But NCLM is fully mobilized and committed to continue making the case for cities and towns, showing how their recovery is crucial to the larger economic future of the country.
NLCM Executive Director Paul Meyer made that clear as early as mid-March.
“We’re in constant contact with all levels of government, from your town hall to the White House, to make sure we’re all on the same page in positioning our communities for the best outcomes,” Meyer said.
