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National League of Cities calls on Washington to help local government with flexible stimulus funds

Posted at 5:58 PM, Jun 23, 2020

WASHINGTON — Cities across the U.S. are hurting in the wake of the financial impact of the Coronavirus pandemic. Two-thirds of them in a new study from the National League of Cities say they’ve halted plans to repair roads or put off major investments. Seventy-five percent say they’re slashing spending or services as they wait and hope for help from Washington.

In passing the CARES Act earlier this year, Congress set aside aid for state and local governments. 3.74 billion came to Ohio with $215 million going to Cuyahoga County but as Cuyahoga County Executive Armond Budish points out. ”That money is very, very limited in how it can be used."

Ohio Senator Rob Portman says if you have a direct COVID-19 expense you can use the money to cover it. "But you can't use it for an indirect expense which is a result of reduced revenue, which is a reduced economy, which is a result of the coronavirus,“ said Portman.

Cuyahoga County at least saw money directly because they have a population over 500,000, the threshold for direct payments but as the National League of Cities points out there are over 19,000 cities, towns and villages in the U.S. only 36 met that criteria and saw direct assistance from Washington.

That's why they are pushing the SMART Act which would provide $500 billion in flexible funding to state and local government to offset what they've lost.

"If we don't get that direct funding looking at this data we got to brace ourselves as leaders but brace our residents because a storm is coming,” said Clarence Anthony, executive director of the National League of Cities.

Local governments are funded by taxes and fees, property taxes on average being the biggest one some however differ relying more heavily on sales taxes to keep the municipal lights on and an even small percent nationwide rely on income taxes to do it, that would be Ohio.

"I'm told that 90% of the cites around the country cannot use income taxes but Ohio can and they do,” said Portman.

Not only use but heavily rely on and when people aren't working they are not generating income and in turn income taxes. Consider this Cleveland gets 66 percent of its general revenue from income taxes. Toledo close to the same and Columbus even more so at 76 percent. That's why they ranked number one in a recent study by Brookings Institute looking at cities most likely to feel quicker the financial impacts of this crisis. In fact four of the top five cities on the list are from Ohio.

The National League of Cities is hoping the senate will act on the SMART Act before their summer recess in August.