On Wednesday, the Otsego (NY) County Board of Representatives voted to lay off 59 employees. I can say with confidence that no one wanted to do it -- but had to do regardless of our personal wants. Sometimes, all of the options are terrible but you still have to pick one.
Four months ago, we were looking forward to a sales/bed tax windfall when Derek Jeter was inducted into the Baseball Hall of Fame this summer. Instead, we're dealing with a pandemic. And now that the immediate health risk is waning -- we haven't had a new case in 21 days* -- we are facing the economic fall-out of a public health calamity.
If you are at all interested in how one local government is managing our current Covid-19 situation, read on. At the end is a suggestion for what you can do to help, no matter where you are.
Our county board is split. All of the republicans voted in favor of the layoff, as did another democrat and I. the other four dems voted against the layoff and have done a great job making their reasons clear. Three stated that the county needed to exhaust every other remedy before layoffs; the fourth wants us to cut our contributions to outside agencies first. All good points.
While I agree with them in principle, I also think that the sooner we face up to how unsustainable our financial situation is, the sooner we can stabilize it and regroup.
Here's what you need to know about how Otsego County works, funding-wise. We fund our departments in a couple of different ways - but the two that are important right now are 1) state and federal sources and 2) sales/bed tax.
Let's start with 1.
Most of the big aid programs in the county -- like SNAP, Medicaid, etc -- are funded through a combo of local, state, and federal dollars. In states other than New York, the federal money goes directly to the county without ever passing through the state's hands. Here: the checks go from D.C. to Albany to the county.** In some cases, Albany takes a small cut of the federal money as an admin fee (but that's a different complaint for a different day).
Ordinarily, this isn't a huge deal. While reimbursement takes a little longer this way, eventually the money we are owed gets to us. The majority of these programs, btw, are mandated. We have no choice in whether or not we provide them.***
Currently, Albany usual glacially paced reimbursements have slowed even further. Which makes a certain amount of sense. What happened in New York City epidemic-wise has created bureaucratic chaos -- to say nothing of the loss of life, which was about 23,000, last I looked. Which is, of course, insane.
For the county, this means one of our biggest reliable sources of income isn't at all reliable right now. Additionally, the state has said it will be cutting its expenditures for 2020 by anywhere from 20-50%. These cuts will affect money we as a county have already spent, mind, and had planned on for the future.
To make it relatable (and vastly simplify): Let's say you work for Widget Corp. The widgets you make are vital to the well-being of the most vulnerable people in your community. Your boss lets you know that you'll need to keep making the widgets but that he won't pay you for your work for some indeterminate length of time. And that when you do see the money, it will be somewhere between 20-50% of what you'd expected and will include the widget-making period before the current crisis even started. You can't stop making widgets, however, because it would make the lives of those around you significantly worse.
That's where we are with income source 1.
With 2, it's a lot more straightforward. Our county is home to the Baseball Hall of Fame, the Glimmerglass Festival, and about four dozen baseball-adjacent tourist attractions. The bulk of the income on this line is earned from May - September. The Hall of Fame induction weekend alone was going to be a huge money-maker. With just a few exceptions, all of those economic drivers will be shut down this year. Which is the right call, mind.
But it has repercussions. Our sales tax receipts are already down by about 27% for April. The next few months should look like the elevator scene in The Shining, just in terms of the red ink. This won't be getting better anytime soon.
The last calculation was that we'd be out about $12.2 million in 2020, which doesn't include the money we should be getting from New York State, which may or may not turn up and will be 20-50% less of what we'd budgeted for.
This is maybe (MAYBE) something we could ride out somehow. We've pulled a bunch of projects, like a fire training center, that were going to start this year. Budgets could be slashed and slashed again. If this were income were the only issue, we might bruised but not broken.
There's more terrible news to come, because of course there is.
One of the functions of the county is to collect property taxes, then cut checks to the school districts for their share. It's like what the state does with the county's federal funds. We operate like a big funnel for the schools in the county and this is the time of the year when we give them their dollars. Only, in a good year, we generally float about $9 million in unpaid property taxes. This year isn't going to be a good year and the non-payment rate will likely be much higher.
Still. We have to make the schools whole, even though our income isn't coming in. And we have to pay our payroll taxes and for employee health insurance. And, of course, payroll.**** Those are bills we don't have the option to ignore. Laying off 58 people, in addition to the other immediate cuts we could make, buys us some fiscal breathing room.
There will be more cutting to come, especially to services that we offer but are not required to perform. We're hoping to find efficiencies in the work we do, which will likely mean combining offices that will lead to more positions being cut. None of this is ideal. All of the other options are worse.
Ours isn't the only county dealing with this. Now that we're starting to wrap our heads around the virus itself, we'll now need to reckon with the financial fallout. It's going to be ugly everywhere.
There is no magic wand to make it go away. The federal government, however, is currently debating a relief package -- the Direct Support for Communities Act (which is part of the HEROES act) -- that includes funds for state and local governments. The house has passed it -- and now it is in Mitch McConnell's Senate.***** If it passes there, which is a long-shot, it'll need to be signed by the president, which is a longer-shot, unless it isn't because who knows what he'll do at any given moment.
But this is our best hope right now to ameliorate some of the pain we're in and will continue to push through. Call your personal U.S. House member and your Senators, even if you think they are a lost cause. Tell them to help local governments -- you know, the ones closest to the people they represent -- keep jobs and services their communities need.
It'll take all of five minutes and you'll get to feel all civically warm inside for the rest of the day.
* I spoke too soon. One was reported today.
** Like God to Larry to you to the cleaners but with less popcorn.
*** but would provide them regardless because it's the right thing to do.
**** for this (hopefully) temporary cash flow problem, the county is getting a loan called a RAN. We hope to not actually touch it, let it earn some interest, then pay it back in a year. "Hope" is the key word.
***** I know. But I'm trying to be positive, here.