Modified: April 23, 2020 6:34pm
Created: April 23, 2020 5:36pm
Dark clouds still loom, as the $160 million in federal funds
must be spent on Coronavirus related costs, not to offset anticipated losses in sales tax revenue and cuts in New York State aid
(ERIE COUNTY, NY) – Erie County Comptroller Stefan I. Mychajliw Jr. has confirmed that Erie County government received anticipated funding from the federal government totaling $160,306,414.50 to assist with COVID-19 related expenses. The revenue was direct deposited by the Federal Government into Erie County’s Trust Account on April 23, 2020. The money is the result of the CARES Act stimulus package passed by federal lawmakers and signed by President Trump. The legislation provides financial assistance to local governments combating the Coronavirus.
The $160 million Erie County received is extremely restrictive. According to the federal legislation, the resources must be used for direct COVID-19 expenses and cannot be used for previously budgeted expenses.
This restriction does not allow Erie County government to use the resources where it is needed most: the potential loss of tens of millions of dollars, possibly even $130 million, in sales tax revenue, the largest source of revenue in the Erie County budget. There is also the possibility of tens of millions of dollars of cuts in New York State aid.
“I’m pleased Erie County has received this federal aid so quickly. It will help pay the direct cost of COVID-19 related expenses,” said Erie County Comptroller Stefan Mychajliw.
“But I want to stress: this money cannot be used to help balance the budget. It will not help us fill in gaps from what we expect will be catastrophic losses in sales tax revenue. This purpose for this funding was spelled out very clearly in the first stimulus package. It must be used for expenses incurred directly as a result of dealing with COVID-19 through December, 2020. It cannot fund anything that had Erie County lawmakers had already included in the 2020 budget.”
Some initial reports indicated federal lawmakers would provide local municipalities flexibility to use some of that $160 million to offset anticipated losses in sales tax revenue and cuts in New York State aid. That measure was not included in the most recent stimulus bill. Now Erie County government still faces the potential for massive losses of revenue with no additional assistance from the federal government. Potential cuts in New York State aid to Erie County could climb anywhere from $18 million to $27 million.
“I hope our federal lawmakers soon pass legislation that will provide aid to local governments,” said Comptroller Mychajliw.
“Don’t get me wrong. This is good news. But we are not out of the woods just yet. It is important to note that Erie County faces what could be a massive budget deficit. We will likely lose tens of millions of dollars in state aid. That is very troubling. I’ve consistently communicated with the community, County Executive and Legislature that, while this funding is extremely important to deal with costs directly related to the pandemic, we still need more federal assistance to help offset a potential loss of sales tax revenue.”
Going back to March 11th, 2020, Comptroller Mychajliw wrote more than 360 letters to lawmakers at the local, county, state and federal levels concerning the negative fiscal impact the Coronavirus would have on the Erie County budget. Most of those letters concerned the request Congress to amend the previous CARES Act to allow counties to use stimulus funds to offset the expected loss of sales tax revenue:
- March 11, 2020 - Letter to county legislators warning of potential fiscal impact of Coronavirus.
- March 16, 2020 - Letter to elected leaders in all Erie County municipalities. Copied to county legislators, advising them to prepare for potential sales tax losses.
- March 20, 2020 - Letter sent to county legislators and County Executive with data showing potential sales tax losses of up to 50% through June, 2020.
- March 27, 2020 - Letter and report sent to all 76 municipalities and school districts in Erie County warning about possible negative impact showing potential sales tax losses up to 50%
- April 1, 2020 - Letter sent to both United States Senators from New York and copied to Congressmen Brian Higgins and Tom Reed, Governor Cuomo, County Executive Poloncarz, and county legislators warning of the negative impact the Coronavirus is having on Erie County finances and the need for more federal help.
- April 7, 2020 - Released report to county legislators. Copied to County Executive. On the local impact of CARES Act, highlighting the need for additional federal assistance.
- April 8, 2020 - Letter to all 27 members of the New York delegation in House of Representatives. Copied to New York’s U.S. Senators, Governor Cuomo, County Executive Poloncarz and county legislators warning of the negative impact Coronavirus is having on Erie County’s finances and the need for more federal assistance.
- April 20, 2020 - Email/letter to all 76 municipalities and school districts in Erie County, New York’s 27 members of the House of Representatives, New York’s United States Senators, Governor Cuomo, County Executive Poloncarz, county legislators, Buffalo Mayor Byron Brown and all Buffalo Common Council members outlining the impact of sales tax loss projections of up to 80%, highlighting the need for additional federal assistance.
“It is a relief to know the $160 million in federal aid is now in Erie County coffers for Coronavirus related expenses. Great news, but Erie County still faces significant financial challenges. We still have major budget gaps to fill. We also expect New York State to inflict financial pain on Erie County,” added Comptroller Mychajliw.
If sales tax revenue drops 50% between March and June 2020, Erie County expects to lose as much as $80 million in sales tax revenue. If sales tax revenue drops 80% between March and June 2020, Erie County expects to lose as much as $128 million in sales tax revenue.
“I sounded the alarm. Loudly and consistently. I hope the federal government hears the call to give Erie County more relief. Without federal assistance to local governments the negative consequences could decimate Erie County government. Layoffs and cuts in services are unfortunately not off the table at this time. This will make the ‘Red-Green’ budget crisis looks like a walk in the park,” concluded Comptroller Mychajliw.