Calarco: Local governments are in trouble; Washington needs to act

Across the country, people from all walks of life are feeling the economic effects of the COVID-19 crisis. More than 33 million Americans have filed for unemployment and millions more will in the coming weeks. Businesses on Main Street have closed their doors to customers and some will never open again. Middle-class families have seen their 401(k)s and retirement plans shattered by the turmoil on Wall Street. Times are tough for the economy and that means that times are tough for families.

State and local governments are feeling that pain as well. The federal government has made some effort to help our families and businesses, but local governments have been left to fend for themselves. If municipalities don’t get relief, communities across the country will be severally hampered as they try to recover, because it is municipalities that have the most involvement in residents’ daily lives.

Suffolk County has been on the front line in battling the coro- navirus on Long Island. Our Department of Health Services has been coordinating the medical response and working every day to ensure that we have adequate hospital beds so everyone who needs treatment can get it. Our Department of Fire, Rescue, and Emergency Services (FRES) has been coordinating the distribution of personal protective equipment that is keeping front-line workers safe. Our Department of Social Services is responding to the unprecedented needs of our residents, many of whom will rely on government assistance for the first time in their lives. Suffolk County workers are doing extraordinary work, but this has come at real financial cost. The response to this emergency has placed an incredible cost burden on the county, and assistance from the federal government does not meet the need.

The CARES Act passed by Congress provided some assistance for state and local government, but it has come with severe restrictions that do not account for the budgetary impacts to state and local governments resulting from the shutdown of the economy. At most, Suffolk County can receive $259 million, but the funds can only be spent on expenses directly tied to the pandemic response. This is helpful in alleviating the cost of the response, but the true cost to Suffolk County will be the lost sales tax revenue due to the economic shutdown. The federal government has failed to address this looming crisis.

Suffolk County’s annual revenue is substantially composed of sales tax. While the county also brings in money from property taxes, fees, and other taxes, sales tax is the main driving force that keeps our local government funded. In crafting our 2020 budget, which was adopted before the coronavirus pandemic, we estimated that we would receive $1.58 billion this year from sales tax, but with stores and restaurants closed and shopping and discretionary spending on the decline, we are already seeing sales tax revenues begin to evaporate. As of May, we have seen a $13-million decline as compared to the previous year, and the trend line is getting worse. This is an historic drop in sales tax revenue.

A recent analysis from the Suffolk County Legislature’s Bud- get Review Office estimated that we could be facing a shortfall of at least $100 million dollars this year. According to a recent report by the New York State Association of Counties, the shortfall will range between $130 million and $300 million depending on the severity and length of the recession the national economy has already entered. Suffolk County has resisted raising property taxes for more than a decade. During my eight years as a legislator, your general fund property taxes have not gone up one dollar. I am very proud of that record, but it has had the effect of making the county more reliant on sales tax.

Local government is the engine that will restart our economy. During the Great Recession a decade ago, when private industry grinded to a halt, it was government spending that kept the econ- omy moving. We put men and women to work with municipal infrastructure projects that our community desperately needed. Local government provided individuals and families the relief they needed with support like unemployment benefits and nutritional assistance. We built affordable housing across Suffolk County that helped make it possible for young people to stay here. Suffolk County helped drive a decade of growth in our economy, and we will do it again as we dig ourselves out of this crisis. But we cannot do it alone. We need help from the federal government to make up for the catastrophic budget shortfall that we are facing this year. If they fail to act, Suffolk County will have to consider deep cuts to programs and services when they are most needed -- and that is a future that our residents cannot afford.