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SMART Act looks to help local government COVID response

As COVID-19 has slammed local governments, they’ve been forced to dip into reserve funds and come to terms with the prospect of years of economic hardship due to skyrocketing costs and loss of tax revenue.

The total cost to counties during the pandemic is estimated at $144 billion through Fiscal Year 2021, according to National Association of Counties (NACO) President and Douglas County Commissioner Mary Ann Borgeson. County leaders said federal legislation could provide a lifeline as they consider making deep budget cuts that would mean furloughing or laying off essential frontline workers.

Sens. Bill Cassidy (R-La.) and Bob Menendez (D-N.J.) introduced the State Municipal Assistant for Response and Transition (SMART) Act on May 18. It would provide $500 billion in funding to state and municipal governments to offset the economic impacts of COVID-19. The funds can be used to help state and local governments meet the current demand for COVID-19 tests, expand testing capacity and contact tracing. It also provides further assistance to residents, local hospitals, small businesses and schools, in addition to maintaining critical services residents depend upon.

The funding would be distributed to states based on population, infection rates and revenue losses. For a state awarded $6 billion in SMART funds, for example, $4 billion would be allocated to helping stabilize the state government, $1 billion would be split among its counties and the remaining $1 billion dispersed to municipalities based upon their population, infection rate and revenue loss.

Last week, the House of Representatives passed sweeping relief legislation that includes almost $1 trillion in relief to state and local governments. That bill, dubbed the HEROES Act, was scoffed at by Senate Republicans and prompted a veto threat from the White House.

NACO Commissioner Tim Bubb of Licking County, Ohio, said the pandemic has been particularly devastating for county workers who work in law enforcement, first response, and corrections.

"We're burning through our reserve funds. We got some [Coronavirus Aid, Relief, and Economic Security] Act money, with more to be redistributed by the state of Ohio," he said on a call with reporters.

"We're being very conservative because it's hard to tell how we're going to come out of this."

Penny Postoak Ferguson, county manager for Johnson County, Kan., said her county had taken steps after the Great Recession of 2008 to prevent another economic catastrophe such as having to declare bankruptcy.

"We're a AAA-bond rated county. Rating agencies [usually] look at our funds and make sure we have somewhere between 25 to 30% [of our budget] in reserve. During the recession, we were able to work with bond agencies and come up with a four-year plan [to recover]."

However, because the COVID-19 pandemic was so unprecedented, she said it was difficult to gauge how the county and state would be able to respond this time.

"In this case, because it's so concentrated and so fast, we don't have that level of planning or recovery time. This is why the federal recovery funds really help,” she said. “It [has] hit us at a different rate than before. We can get by for the next year or two, but we want to reiterate the impact on local governments."

This article was first posted to FCW, a sibling site to GCN.

About the Author

Lia Russell is a former staff writer and associate editor at FCW.


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