When it comes to the challenge of protecting public health even as he tries to protect the bottom line in the midst of the COVID-19 pandemic, Mike Pries finds himself engaged in the most delicate of all balancing acts.
Pries, a Republican county commissioner in Dauphin County, says local officials are paying close attention to spending “to ensure that essential county government services continue.”
“We have to plan ahead. That is why we’re taking steps now to lessen the financial impact,” he said
He’s not alone.
With tax collections in free-fall because of shuttered businesses and skyrocketing unemployment, county officials from Erie to the Poconos, and all across the nation, say they’re bracing themselves for the worst, and are doing their best to plan ahead.
“America’s counties have extraordinary responsibilities,” Mary Ann Borgeson, a county commissioner in Douglas County, Neb., and president of the National Association of Counties, said in a conference call with journalists earlier this week. “We are the boots on the ground in the fight against this pandemic.
“As county leaders, it is our duty to respond, to make sure that resources are there that our personnel need,” she continued. “Our budgets at the local level are taking an extreme hit. Our revenues are dropping while our costs are skyrocketing.”
Counties have found themselves conducting “business as unusual,” in the midst of the pandemic, Lisa Schaefer, the executive director of the County Commissioners Association of Pennsylvania, wrote in a Capital-Star op-Ed.
“Each of our 67 counties is working with distinct differences in resources but sharing one common goal to protect public health and help reduce the spread of COVID-19,” Schaefer wrote. “We are uniquely positioned to provide real support, identify challenges on the ground, pursue solutions and deliver vital services. Now more than ever, our residents are benefitting from the essential functions performed by counties.”
Taxes and Spending
County governments provide an array of services, from mental health counseling and domestic violence protection and healthcare through county-run hospitals and health centers to public safety in the form of the county court system, sheriffs’ departments and county jails.
And the money for those services largely comes from just one place: The taxes and fees that residents pay to their county governments. All told, taxes and fees provide 70 percent of the funding for county budgets nationwide, Teryn Zmuda, the counties’ association chief economist said.
“Counties are limited in their ability to raise money,” she said. “About two-thirds of counties rely on property taxes for a quarter of their revenue. Property and sales taxes are very important to the bottom line.”
Such is the case in Erie County in northwestern Pennsylvania, where property taxes account for $78 million, or about 18 percent, of the county’s total tax revenue, Erie County Finance Director Jim Sparber told the Capital-Star.
Sparber said it’s too soon to tell how bad of a hit that Erie County’s bottom line will take from lost tax revenue. That’s because some people have already paid their taxes and the county’s largest employers, who employ 17.8 percent of the local workforce, are largely still in business.
In Allegheny County, property and sales taxes account for a little more than half, 51.1 percent, of the funding for the county’s operating expenses, county spokesperson Amie Downs told the Capital-Star. Officials in Pennsylvania’s second-largest population center also say it’s too soon to tell how badly tax collections will be impacted, but they acknowledge that they’ll take a hit.
Entertainment and hospitality
For many Pennsylvania counties, such as Dauphin and Monroe counties, the entertainment and hospitality industry provides a big chunk of local revenues. Dauphin County is home to the Hershey resorts and entertainment complexes, as well as Penn National’s Hollywood Casino The Poconos similarly play host to an array of hotels, entertainment sites and a casino.
Nationwide, emergency declarations and stay at home orders have impacted the movement of more than 300 million Americans, the national county association’s Zmuda said. County sales and gross receipts taxes raise $53 billion nationwide and that revenue will take a hit as a result.
“According to the March jobs report, we’ve already seen a loss of a half-million jobs in the leisure/hospitality sector,” Zmuda said. “That will hit sales tax [collections].”
Amy Richards, a spokesperson for Dauphin County Commissioners, said officials expect the revenues the county sees through its 5 percent hotel tax, and its local share of casino revenues will “sharply decline, although by how much, we don’t yet know.”
“We have heard from area hotels and the Hollywood Casino, which temporarily shut its doors as part of [Gov. Tom Wolf’s] order to close non-essential businesses, that revenue is significantly down.”
If there is a ray of hope for state and federal governments, it’s come in the $2 trillion COVID-19 relief package, known as the CARES Act, recently signed into law by President Donald Trump. The bill earmarked billions of dollars in aid for state and local governments.
Pennsylvania’s share of the relief bill is about $5 billion, the fifth-highest tally nationwide, behind only California, Florida, New York and Texas, according to the PLS Reporter, a publication that covers the state Capitol. About 45 percent of that total has been earmarked for local governments with more than 500,000 residents.
Allegheny County Budget Director Mary Soroka said her office is still “assessing all the information related to CARES and other grants, as well as the impact on the economy.”
In Monroe County, Greg Christine, the county’s chief clerk, said his office is similarly waiting for information on the county’s share of the federal bill.
Dauphin County will receive $853,568 from the CDBG/CARES COVID-19 Act program, county Community & Economic Development Director George H. Connor wrote in a Thursday email obtained by the Capital-Star.
The lifeline from Washington to states and counties, “proves the strong local, state federal, relationship we need to address this crisis,” the national counties association’s Borgeson said.
This story was written by John L. Micek. It includes reporting from Micek and Capital-Star Correspondents Patrick Abdalla, Kim Lyons and Hannah McDonald.