Counties brace for budget crunch as coronavirus hits local economies

Local governments across the country are bracing for economic pain brought on by the coronavirus pandemic.

Drops in tax revenues, delays in payments and waived fees could leave local government coffers less full than anticipated. Meanwhile, counties are facing new costs to keep first responders and other “frontline” workers safe on the job.

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“Our budgets at the local level are taking an extreme hit,” said Mary Ann Borgeson, president of the National Association of Counties and Douglas County, Nebraska, commissioner, on a conference call Wednesday. The call did not include any metro Atlanta officials. “Our revenues are dropping dramatically, while our costs are skyrocketing.”

Unanticipated costs for county governments include personal protective equipment like gloves and masks for first responders and new equipment to allow more employees to work from home, Borgeson said.

It’s hard for governments to anticipate the exact impact on their bottom line, but they know it’s coming. With businesses including restaurants and retail stores largely shut down or restricted to take-out and pick-up service only, sales tax revenues are expected to drop. Metro Atlanta counties generally collect property taxes in the fall, so due dates have not changed. But if they’re pushed back, a significant amount of money could be delayed in getting to the government.

Projections for metro Atlanta counties are still in the works, but Atlanta expects the pandemic to cost it up to $40 million, according to Mayor Keisha Lance Bottoms. The city’s hotel-motel tax collections have dropped 80%, and the city will spend at least $17 million on coronavirus-related costs.

Bottoms transferred $7 million out of the city’s general reserve fund in March to help small businesses, provied senior food programs and purchase equipment to allow more city employees to work from home. About $10 million has been approprated to pay city employees who can’t work remotely $500 in hazard pay from March through June.

Cobb County’s budget year starts in October, so they’re likely safe until the fall, said county spokesman Ross Cavitt. But after that, the budget may be impacted. The county doesn’t have “solid projections” on how coronavirus may affect their bottom line yet, Cavitt said.

DeKalb County planned their 2020 budget expecting a recession and property taxes make up the bulk of revenue, so CEO Michael Thurmond believes the impact on the pandemic won’t be as bad as it could have been. But the county is not insulated from the pandemic’s effect on the economy.

“The revenue shortfall will impact us, but we feel confident that we’ve taken at least preliminary steps, significant steps, that will mitigate the impact of this financial hit that all governments will take,” Thurmond told the AJC. “The challenge is that no one knows how long this economic downturn is going to last.”

Steps taken to prepare for a recession in DeKalb’s budget included not adding new positions or filling open ones that could be left vacant, Thurmond said. But now, the pandemic has led the county to give an unplanned pay raise to frontline workers — police, firefighters, sanitation workers and watershed management employees who still need to perform their jobs and have contact with the public. The county is paying them time-and-a-half while under a state of emergency due to the pandemic.

“This is unlike a natural disaster that would have you rebuilding roads and other things,” said DeKalb County CEO Michael Thurmond. “Our primary expenditure right now is on the men and women who are providing services and keeping our community safe.”