Counties say they are being shortchanged with coronavirus aid

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“What the Treasury plan does, it doesn’t save any money,” said Matthew Chase, executive director and CEO of NACo. “It just shifts who controls it.”

The nation’s 3,069 county governments are raising an alarm that they are being short-changed in federal coronavirus emergency grants.

Officials of the National Association of Counties estimate that some urban counties are being penalized by a total of $5.1 billion because they are the home to large cities of over 500,000 population that are getting direct grants.

The Coronavirus Aid, Relief and Economic Security (CARES) Act allocated $150 billion to a Coronavirus Relief Fund to help states and local governments offset the cost of the health emergency. Every state, as well as cities and counties with populations of at least 500,000 are eligible for direct aid while smaller government units receive their aid through their state.

The Treasury, however, has reduced the money going to urban counties by deducting the populations of any large cities they are the home to.

Los Angeles County was entitled to $1.7 billion but will lose $696 million that goes back to the state capital in Sacramento, according to Matthew Chase, executive director and CEO of NACo.

“What the Treasury plan does, it doesn’t save any money,” Chase said during a Wednesday confernece call NACo officials held with reporters. “It just shifts who controls it. That same pattern happens across all these major metropolitan areas.”

Harris County in Texas is losing $405 million because it's the home of Houston, even though the county is spending $75 million a month for a temporary hospital in a sports facility, Chase said.

Many of those same counties operate public hospitals and county health departments that are bearing the brunt of the coronavirus epidemic.

“Nationwide, counties operate nearly 1,000 public hospitals, 1,900 local public health departments, more than 800 long-term care facilities and 750 behavioral health departments,” NACo President Mary Ann Borgeson, a county commissioner from Douglas County, Nebraska, said in a letter to congressional leaders.

“We are also responsible for emergency operations centers, human services, jail management, 911 services, veterans services and the ‘last of the first responders’ with coroners and medical examiners, among many other essential county functions,” the NACo letter said.

Teryn Zmuda, NACo’s chief economist, summed up the situation as “a waterfall of additional costs.”

Zmuda said 806 counties entered the current health emergency having never fully recovered to the level of annual revenues they received prior to the 2008 financial crisis.

At the same time, counties are facing revenue shortfalls that include March’s 8.7% drop in retail sales announced by the Commerce Department.

Los Angeles County, which had budgeted for $5.9 billion in sales tax revenue for the 2020 fiscal year ending June 30, is projecting a 50% to 75% drop in those last four months of that period, according to LA County CEO Sachi Hamai.

“The county also projects a 25% reduction in sales tax based revenues over the next fiscal year,” Hamai said, citing the potential loss of billions of dollars in sales tax revenue that helps fund safety net services.

Westchester County located just north of New York City has been hard hit by the coronavirus with 600 deaths and over 20,000 residents testing positive.

Westchester County Executive George Latimer said that has increased his county’s costs by about $10 million for overtime and other expenses in departments of public health, public safety, emergency services, social services and the coroner’s office.

Meanwhile, Latimer said Westchester estimates $90 million to $160 million in lost revenue depending on how long the crisis continues. Those lost revenues include up to $125 million from sales taxes, $10 million from hotel occupancy taxes, $12 million to $16 million from the public bus system and $6 million to $8 million from a drop in parks system fees.

Other county executives in neighboring New York City suburbs of Nassau and Suffolk face similar situations, said Latimer.

Although Westchester County has identified about $20 million in cuts it can make, “There’s no question we need the federal government to step in and underpin the realities of what we provide,” he said.

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