Connecticut’s cash-strapped cities and towns pressed Gov. Ned Lamont on Tuesday to commit to sharing a portion of a $1 billion-plus federal relief program.
Caught between shrinking tax receipts and unstable borrowing options, municipalities pressed the governor to begin discussions immediately with local leaders to resolve the state’s share of the Coronavirus Relief Fund, which one policy group estimated at nearly $1.4 billion.
“We urge you to provide meaningful state CARES funding to cities and towns,” Connecticut Conference of Municipalities Executive Director Joe DeLong wrote recently to Lamont in a letter released to the media Wednesday, referring to the $2 trillion Coronavirus Aid, Relief, and Economic Security Act enacted by Congress in March.
DeLong also used the governor’s own words to remind Lamont of the plight facing the state’s municipalities.
“As you so aptly stated recently: Mayors and first selectmen are the closest on the ground to each community, and the best approach for our state is to have a unified strategy on COVID-19 with our city and town leaders,” DeLong wrote. “Local officials are using untold resources and person-power to fight the COVID-19 scourge – unbudgeted resources.”
At issue is the $150 billion Coronavirus Relief Fund enacted by Congress as part of the CARES Act.
Connecticut’s estimated share of those funds, $1.38 billion according to the National Conference of State Legislatures, is supposed to provide relief to state, municipal and tribal governments.
But Congress only mandated that states share fixed portions of their respective grants with large cities with populations in excess of 500,000. Otherwise, it’s up to state governments to decide how to to divvy up the dollars.
Connecticut has no municipality close to that size; its largest city — Bridgeport — has nearly 147,000 people.
And while municipal leaders here acknowledge Lamont can do what he wants with those dollars — at least until the legislature is back in session — they say that Congress clearly intended communities to get some.
“We feel there is a very clear intent that communities share in that,” DeLong said.
Chris McClure, spokesman for the governor’s budget office, said Wednesday that the administration is working hard to assist not only cities and towns, but social programs, health care providers, child-care services and public safety operations.
“The list of needs will likely grow, but at this time, United States Treasury has not released any of the $150 billion from the Coronavirus Relief Fund to state and local governments, nor have they issued guidance on how those funds may be used,” he added. “We will continue to work with our federal partners to fully implement the programs as they have designed and stress the need for support for our large and small municipalities, as this global public health crisis does not know political boundaries.”
Still, municipal advocates are reminding Lamont their budget problems stem — in part — from his orders to combat the COVID-19 pandemic and corresponding economic chaos. The governor already has ordered cities and towns to either: add 90 days to the deadline for paying July property tax bills; reduce the penalty for delinquent payments from 18% to 3%; or both.
But those relief efforts are just the tip of the iceberg expected to sink municipal tax collection efforts this summer and fall, said Elizabeth Gara, executive director of the Connecticut Council of Small Towns.
Communities also are bracing for a huge increase in delinquent payments with more than 100,000 Connecticut residents unemployed since the crisis began, and thousands of businesses have either shut down entirely or watched their customer base shrink dramatically over just a few weeks.
“All of those is putting towns in a very difficult position,” Gara said, noting that most municipalities still have to pay their workers and many contractors. “We definitely need to know what towns will be receiving under the CARES Act.”
Cities and towns without the budget reserves to keep them afloat this summer could borrow, issuing tax anticipation notes on Wall Street, to tide them over.
But Gara noted that market has been anything but stable since the pandemic began and readily available, cheap credit is far from guaranteed.
But the governor also faces his own fiscal challenges.
His budget director, Office of Policy and Management Secretary Melissa McCaw, estimated last week that state finances could plunge as much as $500 million in deficit before the fiscal year ends on June 30.
And while analysts say it’s still very hard to predict how the coronavirus will affect state government finances in the 2020-21 fiscal year, McCaw said if the economic downturn matches that of the last recession, revenues alone could shrink by as much as $1.4 billion.