ALBANY – The New York State Association of Counties (NYSAC), today released an updated report on the economic impact of the novel coronavirus on New York’s counties that projects potentially catastrophic drops in revenue between $1.5 billion to $3.6 billion over the next year.

The report was unveiled during a digital press conference today, during which Dutchess County Executive Marcus Molinaro and Erie County Executive Mark Poloncarz joined NYSAC Executive Stephen J. Acquario to discuss the impact that revenue losses will have on the ability of counties to reopen and recover from the COVID-19 pandemic.

“Counties are facing an economic calamity that exceeds what we saw in the worst of the great recession, and this time it’s occurring in the middle of a global pandemic,” said NYSAC President John F. Marren, chair of the Ontario County Board of Supervisors.

“Without help from the federal government in the form of direct aid to state and local governments, the counties who are leading the effort to stop COVID-19 and lay the foundation for reopening will face savage cuts to staff and services that could not come at a worse time,” said Albany County Executive Dan McCoy, president of the NYS County Executives Association.

Poloncarz said, “Counties across New York State are facing unprecedented challenges as they respond to the COVID-19 crisis, with economic impacts straining budgets and forcing difficult decisions in everything from the provision of necessary services to personnel and staff cutbacks. Despite significant revenue losses and bleak sales tax projections we are doing all we can now at the county level to protect the health and safety of our constituents while preparing for an eventual ‘re-opening’, but we will need help soon. I am joining Dutchess County Executive Molinaro and my executive counterparts statewide in urging the federal government to pass another financial assistance package to help in mitigating the impacts of these losses we are all experiencing so we can continue to work for our communities.”

The report details how counties face a quadruple threat of:

• Declining local revenues, especially sales tax, but also hotel occupancy taxes, mortgage recording taxes, gaming revenues, among other revenues;
• Higher spending necessary to respond to the health emergency and meet the State’s requirements for reopening;
• The loss of state reimbursement; and
• The potential of significant losses for small businesses on our main streets that could threaten jobs and the property tax base over the short to mid-term.

“Our initial report created an outline of what the economic impact of COVID-19 would look like. Now, as we have more data available, we’re able to color in those lines a little more, and the picture is much darker than we previously thought,” said Acquario. “Just as counties led the closing of our communities, counties are going to be leading the reopening and these numbers make it abundantly clear that we will need significant help from the state and federal government to accomplish that mission.”

According to the Division of Budget’s Summary, “The scope and depth of the reductions to local aid programs needed to balance the FY 2021 Budget have no precedent in modern times. In the absence of Federal aid, nearly every activity funded by state government in the aid to localities budget … will face steep cuts.”

These cuts are expected as the COVID-19 pandemic is spiking demand for social services such as TANF, HEAP, child support, child welfare services and adult protective services.

“Local governments are teetering on the edge of a fiscal cliff as demands for services rise and economic activity is at a standstill. Counties are the foot soldiers in the war against COVID-19, and without direct federal support, they’ll be running out of the resources necessary to continue the fight,” said NYSAC President John F. Marren.

Early estimates project revenues from local sales, which are the lifeblood of local government, are falling off a cliff. Initial projections from the most recent data available show severe declines in retail activity, including:

• Motor Vehicle & Parts Dealers – loss of 23.7%
• Gasoline stations – loss of 18%
• Department stores – loss of 23.9%
• Clothing & Accessories – loss of 50%

These categories of economic retail activity represent some of the largest segments of the economy contributing to sales tax, a major source of revenue for county governments.

“Local taxpayers cannot absorb the loss of this revenue and state aid cuts. As Congress negotiates the next COVID-19 response package, we are asking them to ensure that there is direct and flexible funding for the county governments who are on the front lines of this critical public health and economic crisis” said Albany County Executive Dan McCoy, president of the New York State County Executives’ Association.

“County governments are facing an unprecedented perfect fiscal storm as severe revenue loss and high demand for social service program are threatening to overwhelm county governments interfering with our efforts to combat COVID-19,” said NYSAC Executive Director Stephen Acquario. “Without help from the federal government in the form of direct aid to local governments, counties simply won’t be able to provide the essential services that are crucial to stopping the virus and reopening our communities.”

Local government has borne the brunt of the fiscal impact – from organizing the response to COVID-19 cases to revenue drying up amid businesses shuttering .

Counties outside New York City are expected to lose a cumulative $2 billion in sales tax revenue due to the coronavirus pandemic. Both the New York State Association of Counties and the New York Conference of Mayors are each calling for federal funding in a phase IV stimulus package known as the Coronavirus Community Relief Act.

“The Coronavirus Community Relief Act would provide a $250 billion stand-alone fund for COVID-19 related costs for communities with fewer than 500,000 residents,” Sundquist said. “This comes after smaller municipalities were mostly left out in the CARES act, which only provided a direct federal fund for states, tribal groups, and cities larger than 500,000 residents, which comprises only 14% of the United States population.”

“County leaders are the onsite incident commanders, serving as the generals on the ground. They are developing innovative ways to stop the spread of the virus, modeling courage at the local level, and are focused on strengthening their communities during this global pandemic,” said NYSAC Executive Director Stephen Acquario. “The NY Counties Lead campaign will share the stories of innovation, courage and community that exemplify the work of our county leaders and heroic frontline workers they oversee.”

Meanwhile, Congressman Tom Reed on Tuesday said he will support the effort to get the funding, adding that the Phase IV stimulus package will likely be developed and finalized in May.

New York State Comptroller Thomas DiNapoli on Tuesday announced that the economic slowdown will cost New York State between $4 and $7 billion in revenues for the next fiscal year that starts on April 1.

“The amended revenue forecast released by the Comptroller is very troubling for local governments and property taxpayers,” said New York State Association of Counties President Jack Marren. “Local taxpayers will face challenges on four separate fronts at a time when we are fighting the coronavirus outbreak. The first will be an increased demand for health and human services during a recession, the second is a loss in critical local sales tax revenues we use to fund state and local services delivered in our community, the third will come in the form of looming cuts from the state budget, and the fourth will be further reductions in local quality of life services.”

The Comptroller’s estimates assume the ultimate impact is a mild recession, the higher end of the range assumes something more severe. These estimates are also before the consideration of any federal stimulus that may be forthcoming which could provide significant help to the economy and state receipts, such as an increase in federal Medicaid matching funds which would directly benefit the State Financial Plan.

“Our county leaders understand that all levels of government and all facets of society will be severely impacted by the response to COVID-19, but we also believe that the state and federal government needs to invest in our communities because we are on the front lines of fighting the spread of the coronavirus, and helping the people most impacted by an economic downturn,” said NYSAC Executive Director Stephen Acquario.

A forthcoming report from NYSAC will project that the loss in sales tax revenues will exceed $1 billion for county governments across the state. This does not account for the local workforce related revenue losses, and the costs associated with responding to the COVID-19 pandemic.

“Counties are concerned that this fluctuation in projected revenue could result in cuts to state aid that help to fund vital services such as public health, services for older Americans, and public safety operations such as 9-1-1 dispatch services and sheriff road patrol,” said President Marren. “Any reduction in state assistance during this emergency public health response will compound the negative revenue outlook that counties are facing.”

“As we have always done, counties stand united behind managing the cost of Medicaid and improving the quality of care for those in need,” said New York State Association of Counties (NYSAC) President John F. Marren, the Ontario County Chair. “However, any state Medicaid proposal must protect local taxpayers by keeping the current cost control caps in place.”

New York is one of the few states in the nation to require county funds to cover the cost of Medicaid, and the only one that required county taxpayers to fund a full half of the State’s share when it was implemented in 1966. Today, counties and New York City fund $7.6 billion of the state’s more than $70 billion Medicaid program.

In 2012, to help counties and local governments adhere to the 2% property tax cap, Governor Andrew Cuomo and State Lawmakers enacted a zero growth Medicaid cap. The cap helped counties stabilize and, in several cases, reduce county property tax rate levies.

“Counties will work with state leaders and with the Medicaid Redesign Team (MRT) to address what is under local control, but we cannot absorb additional costs without jeopardizing vital services that our residents depend on,” said NYSAC Executive Director Stephen J. Acquario. Counties are represented on the MRT by Suffolk County Executive Steve Bellone, who also sits on the NYSAC Board of Directors.

The Executive Budget proposal includes three separate initiatives that would impact the Medicaid local share counties pay in support of the state Medicaid program:

1. 1. Capping eFMAP Federal Fiscal Benefits to Counties
      Under this proposal the Budget proposes to cap the amount of federal savings that have been accruing to counties and New York City from the Affordable Care Act, funneling any savings to the state. This provision is effective April 1, 2020, but no fiscal impact amount is provided in the budget for this proposal.
   2. Require Counties and New York City to Adhere to the 2 Percent Property Tax Cap or Lose the Benefits of the State Funded Local Medicaid Growth Cap
      If a county fails to stay under the property tax cap, or if New York City’s property tax levy grows more than the county property tax cap allows, then they would lose all of the savings from the local Medicaid cap in that year. This provision is effective April 1, 2020.
   3. Adhere to a Local Share Medicaid Costs Increase of No More than 3 Percent
      If a county’s local share and associated savings exceeds three percent in any given year, county taxpayers must refund to the state any excess benefit over three percent. This provision is effective April 1, 2021.

“The Medicaid cap has been crucial in helping counties stay under the property tax cap and save local taxpayers money. While we welcome the opportunity to work with the MRT to lower Medicaid costs overall, we maintain that property taxpayers should not shoulder the burden of Medicaid cost increases that counties are not empowered to restrain. We can’t cap what we can’t control, and our taxpayers should not be penalized for that,” said Albany County Executive Dan McCoy, who also serves as president of the New York State County Executives’ Association.

For additional information and resources related to the SF2021 Budget Medicaid Proposals visit https://www.nysac.org/medicaid.