By Reese Oxner and Juan Pablo Garnham
July 21, 2020
As Congress resumes work on a new coronavirus financial relief package, nearly 100 Texas mayors are pressing the state’s congressional delegation for more funding to address revenue losses incurred due to the economic downturn brought by COVID-19.
Texas received $11 billion in funds from the Coronavirus Aid, Relief and Economic Security Act, which were distributed among the state, counties and cities. Some Texas mayors said these have to be spent before the end of the year and for expenditures related to the pandemic response — and don’t address government entities’ losses in anticipated revenues related to decreased economic activity. Others said there’s been conflicting information about how the money can be spent.
Since March, the economic slowdown has directly hit cities’ revenues. According to the state comptroller, local sales tax allocations for cities in June dropped by 11.1% compared with the same month last year.
“The budget calamity looming over local governments is real and it requires extraordinary measures,” said a letter signed by 97 Texas mayors and directed to members of Congress. “We therefore fear that state and local revenue is going to take time to rebound. We also fear that if we do not stabilize our economy, we could see a drop in property tax revenue next year.”
In the letter, which included signatures of leaders from urban, suburban and rural areas, the mayors asked for “direct and flexible fiscal assistance to all cities.”
“What we’re asking [is] for direct assistance for state and local governments. Not for things like pension measures, none of that, but as a result of lost revenue as a result of coronavirus itself,” Houston Mayor Sylvester Turner said at a press conference Monday. “We are the infrastructure that supports the public and private sector, and at this point in time, we are needing direct assistance.”
Before the summer recess that ended Monday, the U.S. House of Representatives approved a Democratic plan to provide $3 trillion in aid on top of what was in the CARES Act. That bill includes nearly $1 trillion for local governments. But unlike the CARES Act, the proposal hasn’t received bipartisan support and has stalled in the Republican-controlled Senate, according to The Washington Post.
“We’re going to work with our mayors and county judges and the governor to see what the need is, and where there’s a real need we will respond,” U.S. Sen. John Cornyn, R-Texas, said on a call with the media earlier this month.
According to NPR, one of the main disagreements between Republicans and Democrats is how much aid should go to local governments and whether this money should be limited to helping only in pandemic-related costs, like the CARES Act, or could be used for filling the budgetary gaps that cities have experienced since the economic downturn. Texas mayors said that although they know they can use the funding from the CARES Act in areas directly related to the health crisis, they do not have clarity on whether they can use it on other areas that are financially strained.
“We’ve had conflicting directions,” Austin Mayor Steve Adler said. “If you look at the words themselves [in the CARES act], it suggests that you can’t use this money for things that were already in your budget, but then the Treasury suggested in the guidance that you can. The flexibility we are seeking is to use funding to fill budgetary shortfalls that cities are experiencing because of the virus.”
Fort Worth Mayor Betsy Price explained that flexibility could help her city promote employment, which she can’t directly do under the current CARES Act regulations.
“What we want is the ability to use it in infrastructure projects to create jobs,” Price said. “Cities need to be able to apply that money in the best way they see to provide help to their communities.”
Arlington Mayor Jeff Williams said his city — which spearheaded the letter — is facing a projected $20 million shortfall due to revenue losses from shutdowns and decreased economic activity. Although the funding was helpful for costs related to COVID-19, such as testing, it did not address the losses in revenue due to shutdowns and decreased economic activity. Overall, COVID-19 expenditures are vastly outpaced by the city’s revenue losses, Williams said.
“This virus is a natural disaster, just like a hurricane, tornado or flooding. And so consequently, we’re requesting aid for emergency services and medical relief, but then also help rebuilding our city as a result of the virus, just as you would if we had had a major flood or tornado,” he said.
Another issue that mayors have pointed out is how the funds have been distributed so far. While the CARES Act provided direct funding from the U.S. Department of the Treasury to cities with populations larger than 500,000 people, smaller cities are receiving these funds through the state and the counties.
Arlington is one of those cases. The city’s population is just under 400,000 — not reaching the 500,000 threshold required to receive direct funding from the CARES Act and instead receiving funds funneled from the state. Mayors like Williams, in these smaller cities, said the process of getting the funds needed to be “sped up” to avoid “going through several layers of government.”
“Cities are one of the most important economic engines in the country. And so, if we don’t help cities now, we’re not going to be able to help our citizens and our businesses,” Williams said. “It actually is going to cost the country more later if we’re not helped now.”
The call from mayors to the congressional delegation comes as cities are starting to debate their budgets and considering possible cuts for next fiscal year. Laredo Mayor Pete Saenz said his city, which has a population of about 262,000, is projecting $26 million in revenue losses through December, which could mean “drastic layoffs” for city employees. The ripple effects of these losses could also have long-term effects on the city budget, he said.
“We foresee, easily, a two-year impact or more, depending on how quickly the vaccine comes out and how quickly we can open up our businesses,” Saenz said.
Saenz said he’s concerned that because many residents may be furloughed or unemployed, the city may see a surge in delinquent property tax payments, further impacting revenue. This, coupled with the decline of sales tax revenue and other revenues, will further impact the local economy as well, he said.
Many mayors worry that without these federal funds, the economic crisis residents are facing will deepen.
“We are struggling really hard now not to have to cut our workforce or reduce our services,” Adler said. “ And it is important that local governments are able to keep providing services to local communities, or else it will exacerbate the challenges.”
Meena Venkataramanan contributed to this story.
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Steve Adler, a former Texas Tribune board chairman, and the Texas Comptroller of Public Accounts have been financial supporters of the Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.