As North Carolina responds to the COVID-19 crisis, it is important to recognize that the effects are widespread and will be felt for months or even years to come.
Small-business owners and their workers have taken the brunt of the economic hit so far, and locally elected officials know that the financial health of those businesses is vital to the future of our communities across the state. While Congress has stepped in with assistance, many small businesses have received little or no funding as their profits were small and eligibility has been tied to business income.
Meanwhile, the broader economic effects are hitting local government, too. When economic activity suffers, so do the tax revenues that cities, towns and counties depend on to deliver services to their residents. In addition to tax revenue, unemployed residents cannot pay fees that help fund operations across local government.
In Oxford, we expect sales tax revenue decreases in the months ahead. Further, our water and sewer department is experiencing a delinquency rate that is higher than usual and compounding, while our recreation budget is taking a huge hit as activities have been canceled and fees collected that helped fund that budget have dropped precipitously.
Cities and towns face this crisis with control over only one primary source of revenue — property taxes. But many small towns require substantial increases in property tax rates to generate any significant sums. A one penny increase on the dollar in property tax rates in Oxford generates about $50,000.
But the last thing that local governments need to be doing now is increasing property taxes and passing along revenue shortfalls to residents and business owners who are struggling to make mortgage or rent payments. That would be not only cruel and akin to trying to squeeze blood from a turnip, but ultimately economically self-defeating. We need to be a resource for our constituents.
I am proud that our Board of Commissioners voted to forgive utility late fees and stop water and sewer service disconnections for non-payment even before Gov. Roy Cooper mandated that step. At the same time, it remains to be seen when or whether those customers will get back on their feet, and be able to pay past due bills.
What does this mean for the long-term?
It means that cities and towns across North Carolina need state and federal help to avoid extending the economic pain to residents and across both the public and private sectors. Local governments and their financial health are crucial to economic recovery. Cuttings services means that we cut investments, including those for critical infrastructure that help fund private-sector employment.
We need Congress to pass a new round of COVID-19 relief that addresses local revenue shortfalls; as such, we encourage U.S. Sens. Thom Tillis and Richard Burr to join the bipartisan efforts of colleagues Susan Collins of Maine and Bill Cassidy of Louisiana to make this happen. We need restrictions on the previous round of federal relief removed so that those dollars can address these shortfalls. We need the North Carolina General Assembly to direct a substantial amount of these federal CARES Act dollars that it received — and which Congress directed for both state and local government relief — to municipal governments. And our small businesses need mortgage and rent help.
The path ahead will not be easy. But emerging from this pandemic in the best way possible will mean that cities and towns remain the strong economic engines that they were prior to the pandemic.
It will require that all levels of government work as partners and work with local businesses even as we face new realities. And it will require that we keep recognizing that we are all in this together, working for a common goal and a common good.
Jackie Sergent is mayor of Oxford