County Leaders Warn of Epic Revenue Losses from COVID-19

Los Angeles County is bracing for sales tax revenue losses of 50 to 75 percent, while other counties are furloughing workers and planning to cut back on vital public services. Reserves might cushion the blow.

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With businesses closed, counties are seeing their sale tax revenue plunge. [News-Journal/Clayton Park]
TNS
The nation’s counties are bracing for hard times as they stagger from revenue losses while facing rising demands for services. They are dipping deep into their cash reserves and having to furlough workers as the country’s economy remains in a deep freeze because of the COVID-19 pandemic.

“The greater problem for us is not just how much more we’re spending in expenses, but how much we look at the loss of revenue,” said George Latimer, county executive for Westchester County, N.Y., speaking in a conference call with reporters Wednesday.

Westchester County, a suburban county of New York City, home to about 1 million residents, is estimated to lose $90 million to $160 million in revenue, due to the coronavirus crisis and its severe economic downturn.

“The concerns that we have is there are precious few ways that we can go about closing these gaps,” said Latimer in his comments during the press call, organized by the National Association of Counties (NACo.) “There’s no question that we need the federal government to step in.”

If the federal government does not help, “it would be a catastrophic loss in basic services,” he added.

As the nation moves into a second month of confronting the global health pandemic, the toll it is placing on local and state governments is coming into clearer and frantic focus. Los Angeles County, the most populous in the country with more than 10 million residents, is facing a 50 to 75 percent decline in sales tax revenue from March through the end of the fiscal year, said Sachi A. Hamai, the county’s chief executive officer. The county also estimates a 25 percent reduction in sales-tax-based revenue in next fiscal year.

“For the county that’s essentially a loss of billions of dollars of sales tax revenue that helps to fund vital public services, including safety net services for the most vulnerable residents,” said Hamai.

Already, some counties are reporting furloughs, according to Matt Chase, executive director of NACo. Monroe County, which includes the Florida Keys, plans to furlough about 15 percent of the workforce. In Pennsylvania, several counties have furloughed hundreds of employees.

“That is typically the last resort,” said Chase. 

“We are seeing local governments, across the board, starting to look at it,” he added.

Los Angeles County has enacted a hiring freeze. While in Westchester County, layoffs and furloughs will be “treated as the last case actions that we will take,” said Latimer.

“We want to see what kind of property tax revenue comes in,” he noted. “The problem is, we don’t know where the bottom is. We’re falling. But we don’t know that we’ve hit bottom.”

One of the takeaways from the 2008 recession was a need for local government to build up reserves, said Chase.

“Counties really have spent the last 10 years trying to build reserves. We could never build enough reserves for a pandemic like this. But thankfully, we had built some, which will help us, short-term,” he added.

The 2008 Great Recession saw the elimination of about 60,000 public health workers at the state and local level.

“So, our public health staff and other frontline staff are already thin,” said Chase. “So, any loss of additional employees is brutal, because we are already at bare bones, in many cases.”

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