Federal Stimulus

Earlier this month, The Batavian asked Genesee County Manager Jay Gsell a series of questions pertaining to the COVID-19 pandemic, the New York State budget and state aid, and federal stimulus proposals.

With the Finger Lakes Region (which the county is part of) poised to enter Phase Two of Gov. Andrew Cuomo’s reopening plan, we caught up the Gsell again today to update our readers about issues that will have and are having a direct effect on county operations.

No. 1 – New York’s $13 Billion Budget Gap

The state’s $13 billion gap, which probably is growing, is tied to the Fed Stim (Stimulus) 4.0 proposal, and we’re also waiting for his (Cuomo’s) first 30-day hit with regard to the state budget and state and county aid reimbursement, or lack thereof. There are three “measurement” periods – the month of April, May through June, and July through December, and we haven’t heard anything yet.

Under the Fed Stim 4 -- the compromised legislation that we hope will get enacted in June, if it doesn’t slip away entirely because of what is going on in Washington right now and the very partisan wrangling that’s going on -- there’s going to be a “Maintenance of Effort” clause in there. That says money can not be reduced or diverted from, in this case, the state down to the other governments if we are part of Fed Stim 4 – with regard to the governor replacing state money with federal money and then still making cuts to local governments.

No. 2 – County Waits for Medicaid Funding

To the best of my knowledge – getting information from the New York State Association of Counties -- there’s already about $2.2 billion that the Fed Stim 1 / 2 provided to the State of New York for Medicaid – for our adjustment of weekly shares of Medicaid. We have not seen hide nor hair of that yet.

In Fed Stim 1, this money went to the states and that’s why we haven’t seen it yet. By the same token, the new Fed 4.0, that may or may not happen, there would be actually no pass-throughs in some cases or limited pass-throughs from state governments to the locals. It would actually be based on population and one or two other metrics, particularly COVID-19 expenses and some other destitution loss of revenue. Remember this is nationwide, not just New York State.

We’re talking now almost two months. I know that there’s a process called reconciliation that is slightly connected to this. Three years recouping of the money that was spent in the Medicaid program on a county-by-county basis. In Genesee County, we would be owed some money. Until they refine that reconciliation process, they’ve been sitting on this Medicaid weekly share money. That is something that Congress recognizes and (saying) "so if that’s the case, why is it that they are asking for money?"

About $450,000 would be adjusted out of our weekly shares over the balance of this calendar year for us at this point. There are 52 weekly shares – do the math, that’s what it represents. But it would obviously be savings to us in our general fund budget. It would help us reduce our $9.6 million (annual mandated Medicaid) payment to something closer to maybe just under $9 million as far as calendar year 2020.

No. 3 – Sales Tax Money to Aid Distressed Facilities

In this new state budget, there is a distressed $250 million fund that was set up that is going to be funded from county sales tax shares … so they can put this distressed hospital fund together. There is also federal money for distressed hospitals since COVID-19 started. Then the question will be, "How are states balancing that or not and adhering to these new federal cautions regarding Maintenance of Effort?"

I am seeing in terms of the more recent back-and-forth with Fed Stim 4 that as long as it is not something like the $3 trillion Christmas package that the House voted on – that barely passed two Fridays ago – (there’s a chance it could pass). There’s still some other loan programs and other benefits that they would like to be able to re-up and continue, and the Fed Stim 4 would be an opportunity to do that.

The piece that is connected to aid to counties, cities, towns and villages across the country, still has a decent chance of getting enacted. It was supposed to happen right after Fed Stim 3.5, then it got pushed back to this month which is almost over, so it looks like sometime maybe mid-June if we’re lucky,

No. 4 -- Genesee County’s Operational Status

All of the departments are putting together their reopening plans. We’re still on pause, at least until Friday. Some of our departments that are connected to state agencies like the courts and DMV may be into June before they can remotely think about some kind of general public reopening, and even that will be on a gradual basis.

Our highway crews are back – doing roadwork. We’ve never changed the operations as far as the jail, communications and the sheriff’s department; same thing with the county health department that has been working on full cylinder right from the get-go. Same with county emergency management.

We’ll start preparing at the very end of this month or early June, presuming that NY Pause is not part of our future.

If our seven metrics in the metric calculator that the state uses all stay in the green, we should be able to open on Friday for Phase Two. Again, there’s no absolutes as far as that’s concerned. Again, we’re talking about a (Finger Lakes) regional basis, so we may not be able to start Phase Two on Friday.

No. 5 – Six Furloughed Employees Return to Work

We are bringing a few people back. From our perspective and the departments’ perspective, they need to bring people back to help meet the demand and pick up the slack. But, again, we are using it also as a budget-saving tool in case the state comes in with its 20 percent reduction right out of the gate – which could be about three-and-a-half million dollars. Plus, whatever happens with our next quarter sales tax (revenue) report.

Currently, 42 employees are on furlough – (down from 48) – and we also froze another 40 positions that are staying that way. If your buildings and operations are not at full service, there’s no point in trying to bring people in to fill vacancies when you can’t send them off to training, can’t send them to the schools, can’t get them oriented, and even can’t have them work with colleagues to learn on-the-job training stuff.

No. 6 – The Importance of the 2020 U.S. Census

People need to fill out their U.S. Census forms. A lot of what’s coming with this state and federal aid is connected to the population of our communities. We need to have the U.S. Census filled out and achieve a better than 72 percent (rate). We need to be as close to 100 percent as we can. A significant number of the dollars are connected to the population of the communities across the country, so we do not want to be on the short end of that equation.

Update: May 13, 9:30 a.m.

Congressional Democrats reportedly are proposing the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act -- a $3 trillion coronavirus stimulus package that includes additional $1,200 checks for individuals (up to $6,000 per family) and $915 billion for states and local governments.

In addition, the extra $600 a week federal unemployment benefit would be extended through Jan. 31, 2021, under the proposal. That extra payment was supposed to run out at the end of July.

The bill would also provide:

• $200 billion in “hazard pay” for essential workers, such as grocery store employees and health care personnel;

• $75 billion toward more coronavirus testing;

• Send $25 billion to the U.S. Postal Service;

• Add $10 billion to the Payroll Protection Program meant to help businesses and especially underserved businesses and nonprofit organizations;

• $3.6 billion for local officials to prepare for pandemic-era voting challenges in November;

• $600 million to police departments for salaries and equipment

• $600 million for state and federal prisons;

• Provide $100 billion to hospitals and health care providers to cover costs, with a special focus on health care entities in low-income communities.

The New York State Association of Counties is applauding the proposal.

“The federal stimulus proposal introduced today includes funding allocations that have been championed by Senate Minority Leader Charles Schumer and the entire NY Congressional delegation. This essential funding is necessary for essential public employees to provide essential services to stamp out COVID-19 and begin the process of reopening communities," said NYSAC President John F. Marren in a statement.

"County leaders commend House Appropriations Chair Nita Lowey and Speaker Pelosi for beginning the negotiating process by introducing this important legislation. We thank New York’s bipartisan congressional delegation for fighting to help New Yorkers survive and thrive during the pandemic."

The executive director of the New York State Association of Counties has issued an “urgent plea” to federal lawmakers to allocate funds to states and local governments severely affected by the COVID-19 pandemic.

Speaking at a press videoconference this morning, Stephen J. Acquario said New York and its counties are facing hundreds of millions of dollars in lost revenue and need Congress and the President to pass legislation immediately.

“We are issuing an urgent plea not to give up,” Acquario said, referring to the adoption of another federal stimulus bill. “We know and we’re confident that (this can happen) with the support of the Senate Democratic leader Chuck Schumer (and) the New York delegation.

"And now we’re reporting the President of the United States Donald Trump has signaled support for state and local fiscal relief along with another couple of issues concerning infrastructure and rural broadband to be included.”

Acquario mentioned the Senate’s passage on Tuesday of a fourth wave of legislation to extend the small business payroll protection program as well as funds for health-care-related expenses, including state and local testing capacity, tracing and employer testing.

“All (are) very important, critical pieces of legislation," he said. "What is missing from this latest piece of federal funding is essential funding for lost revenue for the State of New York and the counties of New York. We are unique in the United States – the counties of New York – in what we do and what we provide and how we’re funded. Our reliance on sales tax is essential … (and) we have suffered tremendously.”

Acquario cited reports from Erie County that show a loss of $150 million in economic activity, with sales tax projections dropping, and from Long Island that show $200 million in lost revenue.

He also said that NYSAC seeks funding for rural cellular service improvements in tandem with an infrastructure bill.

Acquario touched on several other topics during his 10-minute presentation:

-- Noting the cooperation among New York and neighboring states, he said that New York’s counties will be “part of and leading the regional Mid-Atlantic northeastern portion … in coordinating with nearly 300 county governments."

“We’re going to be setting up a program – Think Regional and Act Local,” he said. “By bringing the best practices from the epicenter of the United States – New York City, the lower Hudson Valley counties and Long Island and other areas -- and sharing those best practices of what we did during the pandemic, we can further support and supplement Governor Cuomo’s efforts to protect this region of the United States, enabling it a better chance to reopen and re-emerge.”

The new partnership reportedly will be called the Northeast/Mid-Atlantic County Coronavirus Coalition.

-- Reporting that Schumer has secured federal funding at the 100 percent level for Federal Emergency Management Agency-relate expenses.

“This is very important for the State of New York and for the counties that are submitting for FEMA reimbursement for personnel, supplies, equipment – this includes repurposing buildings, temporary medical facilities and temporary shelter facilities – repurpose buildings, shortage, temporary morgues, temporary storage of human remains and disposal costs of medical waste,” he said.

-- Sharing details of the “regional reopening of New York” as announced by Gov. Andrew Cuomo on Tuesday.

“The number of cases in the State of New York continue to hover around 63 to 65 percent in the City of New York, 21 percent in the two counties on Long Island – Nassau and Suffolk – about 8 percent in the Lower Hudson Valley counties of Rockland and Westchester. Then if you project out to the 53 other counties, it’s about 7 percent is the rate of infection,” he said. “That is the testing data that we have.”

Acquario said the regional reopening approach hinges upon meeting certain criteria, such as hospital capacities of 25 percent above normal capacity being in place in that hospital's region of the state, and that there has been fewer than 10 new COVID positive hospital admissions within the last 10 days.

“So, elective surgeries can resume in those areas of the state where those protocols are in place,” he said.

-- Recognizing the work of county officials across all departments who are responding to the COVID-19 situation and showed a public service announcement indicating as such.

After attending a recent national conference and speaking with several local engineering consultants and heavy highway construction contractors, I am of the opinion that the American Recovery and Reinvestment Act of 2009 (a.k.a Stimulus) is something short of stimulating--at least for transportation officials.

The $787 billion Stimulus Plan was sold to taxpayers as an infrastructure program that would rival the New Deal's Works Progress Administration (WPA) and Eisenhower's Interstate Highway System.  In reality, less than 4 percent, or $29 billion of the total plan is being directed at highway and bridge spending.  While this is still a tremendous amount of money, it does little to repair the gaps in the nation's infrastructure.  If you factor in other modes of transportation such as airports and railroads, the total stimulus investment is $48.1 billion, or approximately 6% of the total plan.  Much of the remaining amount is planned for social service initiatives, state tax and Medicaid relief and energy efficiency. 

While I applaud the drive towards green energy, I am a bit concerned that after this money is spent we will have little to show for it.  Under the WPA and Interstate Highway System our nation created lasting infrastructure.  We had assets that were worth the debt we created.  Under ARRA, we will have injected little into our growing infrastructure problem and thrown the rest at a one-time attempt at saving state governments from making difficult choices regarding overgrown and outdated programs.

Aside from the obvious lack of highway and bridge funding under stimulus, the program itself created constraints that made funding large infrastructure projects impossible.  ARRA required funds to be obligated within 120 days.  This limitation essentially ruled out most bridge projects, as the design requirements under federal regulations dictate a 9 to 18 month process to evaluate bridges, the adjacent environment and any right-of-way acquisition.  Unless a jurisdiction locally funded and designed a bridge following federal guidelines and had it sitting on a shelf waiting for aid, it was not going to receive ARRA funds for bridge replacements. 

A bulk of the stimulus money will be going towards "painting the roads black", that is simple pavement maintenance projects that overlay existing roads with new asphalt.  This is a maintenance treatment in most cases and will last anywhere from 7 to 15 years.  This type of work will not be creating any new jobs.  Quarries will not be adding staff or equipment.  They may work some additional overtime, but new hires and equipment are not required. 

Contractors are not hiring either.  This goes against logic, but in reality, the much touted stimulus plan in many states only provides a one-time reprieve from state or local funding of the same projects.  In many places, government has instituted the "lift, clean and replace" rule.  This means that projects that were going to be funded with state aid and local funding are now being funded with federal stimulus and the money that was obligated is being held in reserve or being used somewhere else in the budget.  To make matters worse, due to delays in approvals on ARRA projects, many of these projects will now be completed in 2010 as opposed to the current year.  So not only are contractors only working the same work load as a normal year, many of the projects are now scheduled to be awarded too late in the current construction year to be implemented before winter arrives. 

Long term, I am afraid that ARRA will have given taxpayers a false sense of security when it comes to overall transportation funding.  The need for infrastructure improvements is constantly growing and current estimates place the financial need at $2.2 trillion over 5 years to bring the nation's infrastructure up to speed, with $937 billion needed just for highways and bridges.  Taxpayers will not stomach another large spending program targeted at transportation because they are under the impression that this was fixed by stimulus.  The existing Dedicated Highway and Bridge Trust Funds at both the Federal and State level are nearing bankruptcy and will require additional funding from the General Fund to stay afloat.  These funds derive their income primarily from motor fuels taxes.  As cars acheive higher mileage ratings and people drive less, the collection of gas taxes drops.  This has been the case for some time and it is estimated that the gas tax would need to be increased $0.40 per gallon to makeup the shortfall.  This would obviously not be a popular plan.  Other plans include a vehicle miles traveled tax that conjurs up images of big brother rather quickly.

The bottom line is that the American Recovery and Reinvestment Act of 2009 has done little to stimulate the investment in our transportation networks and without a permanent solution to the current funding shortfall our infrastructure will get worse and worse, hurting our already weak economy.