As restaurants, shops and businesses begin to partially reopen, towns and cities across our state are bracing for significant revenue shortfalls.
Everyone depends on our cities and towns to provide essential services that keep us healthy and safe. If we are to stop the spread of this virus and stabilize our economy, we also need to stabilize our municipal budgets.
But we are already running out of options.
In March, Congress enacted the CARES Act, which set aside $150 billion in grants to help state and local governments pay for the costs of the health crisis. However, Congress stated that the $150 billion can only be used on costs directly related to the coronavirus that weren’t already covered in the state or local governments’ budgets.
With this stipulation, we can spend the money from the CARES Act on things like contact tracing, loans to businesses to cover COVID-19 response or increasing ICU capacity (if your town has a hospital). What we can’t spend that money on are any revenue shortfalls, even if the shortfall is related to the economic shutdown stemming from this virus. We are also unable to receive any money from the Paycheck Protection Program.
Unlike the federal government, many state and local governments are obligated to balance their budgets. If Maine and its towns do not receive more federal funding, any decline in revenue must be met with spending cuts or tax increases.
Many Maine towns have yet to fully recover from austerity measures imposed after the last recession. Some of these austerity measures included major social service program cuts, decreased investment in public services, infrastructure and education. These service cuts were the direct result of shifting costs and reduced revenues to municipalities including revenue sharing, state aid to education, general assistance. These shifts and reductions combined resulted in higher property taxes.
The reality is that municipalities rely significantly on state funding in order to cover essential services. State funding is the primary mechanism to ensure that there is funding equity across income so that all Mainers can receive necessary public services.
While Mainers are doing a good job stunting the spread of the virus, there remains a risk of another spike in COVID-19 cases and another economic shutdown. In addition to the potential loss of state funding and revenue sharing, cities and towns will be forced to cut the essential services that support our local economy.
And it’s not just updated capital investments that would be at risk. Many frontline workers, such as first responders, teachers and health care workers, are employed by local governments. Our cities, like other municipalities, are a major part of the frontline response to this pandemic. If we are forced to make these cuts to balance our budgets, the health and safety of the residents of our communities will be put at further risk.
Our federal government has an obligation to ensure that local governments do not fail in our efforts to protect our communities. While the original federal bills were helpful, significantly more aid is needed to protect our frontline workers and ensure a smooth economic recovery.
Actions taken by our U.S. Sens. Angus King and Susan Collins and U.S. Reps. Chellie Pingree and Jared Golden at the federal level are important and appreciated. Collins’ SMART Act is an important step forward, but $500 billion divided between state and local governments does not go far enough.
This level of funding will provide the state with the resources needed to avoid cutting back on revenue sharing, and it will provide municipalities such as Hallowell and Bangor with the ability to stabilize our budgets and continue to provide much needed services that contribute to the health of our communities.
To fully honor our frontline workers, to protect our community and to ensure the city of Hallowell and Bangor, and the entire state of Maine, can recover from this crisis, the federal government must act.
Cathy Conlow is the city manager of Bangor. Nate Rudy is the city manager of Hallowell.