Small US cities fear losing out on stimulus fund

WASHINGTON (AP) – The USD2.2 trillion federal stimulus package could fail to deliver badly needed financial aid to thousands of smaller cities and counties where a majority of Americans live, according to documents and interviews with local officials.

The coronavirus outbreak has blown holes in the budgets of communities as the costs of battling the outbreak skyrocket and critical sources of revenue like sales and income taxes plummet.

The Coronavirus Relief Fund uses a formula based on population to parcel out tens of billions of dollars to the states while allowing local governments with more than 500,000 residents to apply directly to the Treasury Department for cash infusions. But localities below the half-million population threshold are in limbo.

Among those affected: New Rochelle, New York, one of the cities hardest hit by the outbreak.

“I cannot understand the logic,” said Noam Bramson, the Democratic mayor of about 80,000 people. “Cities with fewer than 500,000 people have been just as heavily impacted as those with more than 500,000 people. It strikes me as a completely arbitrary cut-off.”

A closed sign hangs in the window of a shop in Portsmouth due to coronavirus concerns. PHOTO: AP

Amid the uncertainty, lawmakers and advocacy groups that include the National League of Cities and the United States (US) Conference of Mayors have been urging Treasury Secretary Steven Mnuchin to ensure the relief fund money is fairly distributed. Guidelines for how the relief fund will operate are slated to be issued by the Treasury Department this week. The department announced on Monday it had launched a web portal through which eligible parties could register to receive the money.

“Because of the lack of specificity in the legislation itself, it really is up for interpretation,” said Irma Esparza Diggs, director of federal advocacy for the National League of Cities. “Everybody’s just kind of holding their breath until Treasury comes out with their guidance.”

Of the nearly 3,100 counties in the US, 130 have populations of more than 500,000, according to the National Association of Counties.

There are 36 cities over the half-million mark, the National League of Cities told President Donald Trump in a letter last week. More than half the country’s population lives in cities, towns and villages of fewer than 50,000 people, the letter noted.

Cities including Miami and Kansas City, Missouri, are under the cut-off, according to the most recent Census Bureau figures available.

“Depending on who you believe, we’re either at 470,000 or 510,000,” said Miami’s Republican mayor, Francis Suarez. “We’re projected to lose about USD20 million a month while our economy has ground to a halt. The state of Florida is slated to get USD8.3 billion, but we’re not sure if we’re going to get any of it.”

Every state will receive at least USD1.25 billion in relief fund money. The state government gets the biggest share of the total – New York, for example, is projected to receive USD7.5 billion, according to estimates prepared by the non-profit Tax Foundation. The state gets USD5.2 billion of that amount, and local governments that have more than 500,000 residents are eligible for the rest in direct payments.

The Treasury Department guidelines may permit below-the-threshold counties and cities to appeal directly to the governor for a portion of the state’s relief find allotment, according to Matt Chase, executive director of the National Association of Counties. But that may heighten the potential for political alliances to be formed in the quest for money or behind-the-scenes lobbying campaigns to get a piece of the state’s share.

“Each local government would have to go hat in hand to the governor and say, ’Can we have part of your allocation?'” said Chase, who added, “We don’t need a lot of politics right now.”