Local Politics

Pandemic leaving potholes in city budgets

Posted July 2, 2020 7:44 p.m. EDT

— Local governments are in a budget bind because of the coronavirus pandemic.

Wake County, for example, had to eliminate 100 full- and part-time positions to balance its budget this year, while Raleigh put a proposed parks bond on hold and cut some maintenance and software upgrades.

City leaders across the country are calling on Congress to approve relief funds specifically for local governments, noting the pandemic has hit their budgets from several directions:

  • There have direct response costs, such as protective gear, testing and overtime.
  • Revenue from sales and tourism taxes is down.
  • Businesses are using less water and power.
  • North Carolina cities can’t collect on utility bills until the end of July under a statewide emergency order.

State lawmakers set aside $75 million in federal relief aid for cities last month, but Paul Meyer, executive director of the North Carolina League of Municipalities, said Thursday that is just a drop in the bucket.

"We know that, for the months of March and April, we’re already down $63 million in state sales tax and roughly another $75 million in lost utility revenues because of the governor’s executive orders," Meyer said.

Property tax collections will probably be down this year, too, he said, with more than 1 million people statewide out of work and seeking help.

Without state or federal assistance, Meyer said deep cuts in municipal budgets are likely for years to come.

"You’ll see service reductions. You’ll probably see layoffs in city governments. You will see infrastructure projects that were on the table that won’t happen," he said.

While cities like Raleigh are facing bigger shortfalls, they can and are canceling capital projects to close the gap. But smaller towns have less room in their budgets to make up for shortfalls.

Morrisville Mayor T.J. Cawley said his town has already had to cancel plans to add six new fire and police positions.

"We expect the sales tax revenue is not going to rebound for a few years," Cawley said. "We are really the economic drivers for the state. The municipalities have 75 percent of all retail jobs. ... So, we can lead the recovery, but we need some help from the federal government to fill these shortfalls."

The U.S. House has passed a relief package that would help cities and towns, but the U.S. Senate has refused to take it up. The League of Municipalities is calling on Sens. Richard Burr and Thom Tillis to push Senate leaders to reconsider.

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