Next victim of coronavirus may be your local government budget

What may yet prove to be a sleeping giant in the coronavirus shutdown is the impact on local government budgets. Police officers still need to be on duty, as do firefighters. Water still needs to be running. Trash needs to be picked up.

But should local governments share in “the pain” associated with the economic shutdown? At some point, will cities and counties have a choice in the matter?

Nampa Mayor Debbie Kling told me in a phone interview that her city already has furloughed 87 employees, mostly at the Nampa Public Library and the Nampa Rec Center.

Nampa also is making an immediate 1% cut in its current budget, or about $580,000, for the remainder of the fiscal year, by putting some projects on hold and slowing down others. Travel has been reduced, and some open positions have been left unfilled, Kling said.

Major kudos to the city of Nampa. Other government agencies around the Treasure Valley should follow Nampa’s lead. This promises to be a rough ride in the coming months, and cities and counties will need to do everything in their power to avoid cuts to essential services, such as police and fire and keeping the water flowing.

Ada County and the city of Boise have not done any workforce cuts, furloughs or layoffs.

“As an organization we decided to take care of our employees during this time, and we are paying our employees whose operation may be suspended right now,” according to Kelcey Stewart, human resources director with the city of Boise.

Boise city officials, however, are looking for ways to “repurpose” employees so that they can assist with providing essential services.

Kling said they’re doing the same thing in Nampa. For example, if someone’s job at the Rec Center became idle, but that employee could instead mow lawns in the city parks, that employee would be shifted to that job instead of the city hiring a new seasonal employee.

Ada County also is repurposing some employees, such as redirecting court clerks, for example, to help out with the added tasks associated with the primary election, Ada County Clerk Phil McGrane told me by phone.

Ada County, like Boise, has not laid off anyone, although some workers are not working because of illness, being in a high-risk situation or needing to stay home for child care, McGrane said.

“Beyond that, there has been a massive effort by the county to have people work remotely,” McGrane said.

Ada County has not made any budget cuts, he said.

Nor has the city of Boise, although city officials have identified several areas for budget savings this fiscal year, and the mayor has asked departments to reduce spending as much as possible on nonessential activities to try to cover unexpected COVID-related expenditures and revenue losses, according to an email from Karen Boe, communications director for Mayor Lauren McLean.

National survey sounds alarm

The full impact of the pandemic on local government budgets is yet to be seen, but across the country, the alarm is being sounded.

Nearly 90% of U.S. cities expect budget shortfalls due to the impact of the COVID-19 pandemic on their economies, according to a survey this month of more than 2,400 cities conducted by the U.S. Conference of Mayors and the National League of Cities.

The survey found:

• 88% of cities expect a revenue shortfall this year.
• 98% of cities with populations of 50,000 to 500,000 expect a shortfall. (Boise, Meridian, Nampa and Caldwell all fall within that population range in the Treasure Valley.)
• 55% of that same population set expect that furloughing employees will be necessary.
• 38% of these cities say they expect to lay off workers.
• 52% of all cities responding say budget cuts will affect police and public safety.

Relief funds for smaller governments

The aid for state and local governments included in the $2.2 trillion federal rescue package is not being delivered directly to the thousands of smaller cities and counties where a majority of Americans live, the Associated Press reported Tuesday.

The Coronavirus Relief Fund uses a formula based on population to send money to the states while allowing cities and counties with more than 500,000 residents to apply directly to the Treasury Department for cash infusions.

The state of Idaho will receive $1.25 billion in relief funding, and a 14-member oversight committee seated by Idaho Gov. Brad Little on April 7 has agreed that some of that relief money will trickle down to local governments.

Committee members, who include Garden City Mayor John Evans and Seth Grigg, executive director of the Idaho Association of Counties, have agreed to a general allocation formula: 55% ($688 million) will go to the state, 30% ($375 million) will go to county/city/tribal governments, and 15% ($188 million) will be held in reserve for extraordinary expenses.

Counties likely will get the biggest share of the local government money, because they are responsible for jails, coroners, medical transport and courts, which will incur more coronavirus-related expenses than cities.

McGrane said $375 million will go a long way and should be sufficient for COVID-related expenses at the local level.

Property tax revenues

Cities and counties operate on a fiscal year that starts on Oct. 1 and runs through Sept. 30. So most local governments were already about halfway through the fiscal year when the COVID-19 outbreak hit Idaho.

One area of concern is property tax bills. Many people pay their property taxes all at once in December, but some people choose to split their bills in half, paying half in December and half in June.

In Nampa, for example, only about 59% of property taxes has been paid so far this year, or $26.5 million out of $44.8 million budgeted. So $18.3 million is still due.

Boise has collected $95 million so far, with about $159 million budgeted. Ada County has collected $90 million, with $148 million budgeted.

McGrane said officials at the county level are not too worried about not receiving property taxes. Even during the last recession, compliance was still pretty high, he said. The penalty for not paying your property taxes is relatively harsh, he said, so people tend to make those payments.

Shared revenue from the state

Perhaps more troubling is state shared revenues. The state sends to the cities and counties their share of state revenues, such as sales tax and highway tax.

In Nampa, only about 36% of that money has been collected: $5.3 million out of a budgeted $14.7 million, leaving $9.4 million yet to be collected.

The city of Boise budgeted $19.6 million in sales tax revenue and has received $5.2 million, according to Boe. The city receives sales tax on a quarterly basis, and has not yet received its payment for the second quarter, which runs January through March.

Ada County has received $13.7 million out of a budgeted $25.8 million in sales tax and revenue share from the state, as of Wednesday.

I can’t imagine this third quarter being too promising when it comes to sales and fuel taxes.

How much is in reserve?

Cities and counties have reserve funds to help cushion any shortfalls, if they happen.

Boise has a general fund cash flow reserve of about $19.2 million, and Ada County has $21.3 million set aside for budget stabilization reserve (“Rainy Day Fund”) for its general fund.

Nampa’s general fund reserve balance is about $15.5 million, according to Kling.

What’s next

At this point, it’s a little bit of wait-and-see. Local governments will have to see how many people pay the remainder of their property taxes in June, and they’ll have to see how much money comes in from the state from sales tax.

It looks like even if those dollars come up short, at the least the folks I talked to in Nampa, Boise and Ada County should be able to weather that storm with rainy-day funds.

Beyond that, city councils and county commissioners will start budget hearings in the next couple of months for fiscal year 2020-21. That fiscal year starts Oct. 1. Who knows where we’ll be economically by then, but if I were a city council member or county commissioner, I’d start planning now for a much lower budget.

This story was originally published April 17, 2020 at 4:00 AM.

Scott McIntosh

Opinion Contributor,

Idaho Statesman

208-377-6202

Scott McIntosh is the Idaho Statesman opinion editor. A graduate of Syracuse University, he joined the Statesman in August 2019. He previously was editor of the Idaho Press and the Argus Observer and was the owner and editor of the Kuna Melba News. He has been honored for his editorials and columns as well as his education, business and local government watchdog reporting by the Idaho Press Club and the National Newspaper Association. Sign up for his weekly newsletter, The Idaho Way. Support my work with a digital subscription