Local governments asking for stimulus
Even as Shelby County prepares to reopen and restart the local economy, local jurisdictions are heading into budget season preparing for massive revenue losses resulting from the economic disruption caused by the COVID-19 pandemic. But with the possibility of more federal stimulus dollars being offered up, local jurisdictions are hoping to get a chunk to offset the costs of fighting the virus.
With legislators returning to Washington, D.C., discussions of additional stimulus funds are likely. All eight local mayors spoke with Rep. David Kustoff, R-germantown, Thursday afternoon to advocate for additional stimulus funds to be directed to local governments, Germantown Mayor Mike Palazzolo said.
“We were working to make sure he understood the needs of local communities,” Palazzolo said. “Oftentimes when it comes to funding, we're at the bottom of the receiving line.”
The Coronavirus Aid, Relief and Economic Security Act did not provide stimulus funding to jurisdictions with a population of less than 500,000, so the county's suburban municipalities were left without the recent cash infusion given to larger city and county governments.
Memphis received $113.7 million, $10 million of which has already been allocated for utility assistance, aid for displaced workers and small business grants. The city of Memphis remains interested in receiving further federal stimulus. The money already received covers only expenses incurred by the outbreak and can't be used to directly fill revenue holes left by the economic collapse seen over the past several months.
Shelby County Mayor Lee Harris this week announced the county had received $50 million to battle COVID-19, a portion of which will go to bolstering and expanding the county health department. Harris also said some of that money could be used to assist suburban municipalities.
CARES Act funds have to be used for Covid-19-related expenses, but that still leaves governments a fair amount of discretion over how to use the money. While it couldn't be used to replace lost tax revenue, it could be used to pay for overtime for first responders accrued during the pandemic or any personal protective equipment ordered for those essential workers.
Palazzolo said that without stimulus funding, the city would have to explore ideas like cutting services or increasing property taxes to offset projected steep revenue declines.
There is a two-month lag for the state to report sales tax figures to municipalities, so local jurisdictions won't know until May and June how much — or little — sales tax revenue to expect from March and April, respectively. Germantown reported record sales tax revenue for the last few months of 2019, an important source of revenue for cities in a state that doesn't levy an income tax.
While the amount of sales tax revenue that will flow to municipalities remains unclear, Palazzolo said they do know how stunted other revenue sources have become in recent weeks.
“Hotel and motel tax, we do get that on a monthly basis. We've seen about 80% drop from the month of March,” he said. “That's pretty significant.”
Earlier in April, Germantown City Administrator Patrick Lawton said the city was planning on adopting a continuing resolution, carrying over the current municipal budget into the next fiscal year, which starts July 1. Until the city gets sales tax receipts from the state in May and June, the financial picture remains unclear, moving forward.
“It's just hard to know what that might look like,” Lawton said. “We will definitely adopt a (fiscal year 2021) budget, just not right now.”