Another trillion-dollar safety net is in the pipeline in Washington, D.C., as lawmakers debate an economic package that would provide funding for states and towns in the wake of severe losses in sales tax revenue.
The National Governors Association and the Colorado congressional delegation has requested $500 billion from the new bill to boost budgets for state and local governments, but Congress has not yet proposed a specific amount.
The package also faces challenges with timing. The U.S. Senate will reconvene Monday, but the U.S. House announced it will not return next week to Washington, where the number of COVID-19 cases is growing. Without a remote voting system in place for lawmakers, they won’t be able to pass a new economic relief bill until they can congregate in the Capitol.
For towns in Southwest Colorado, there is no time to spare.
Durango is projecting a 30% overall decline in sales tax revenue because of COVID-19, a reduction that exceeds the Great Recession, said Devon Schmidt, the acting finance director of Durango. The city currently relies on sales tax revenue for 60% of its overall budget.
The exact cost of the revenue loss remains unknown, but Durango’s interim City Manager Amber Blake said Tuesday some of the scenarios the city is preparing for are situations “none of us could have imagined before our new reality.”
After the damage from the 416 Fire, Durango’s economy experienced a “V-shaped recovery,” Blake said. Revenue dropped, but the economy quickly recovered back to where it was previously. However, Blake and Schmidt are not expecting a similar recovery from the COVID-19 pandemic
Sen. Michael Bennet, D-Colo., has stressed the importance of direct federal funding for local governments like Durango, which are planning their budgets and steps for recovery.
“Full flexibility is critically important for local counties and for the state,” especially regarding revenue replacement at the local level, Bennet said in a phone interview with The Durango Herald.
“To restrict federal funding to just COVID-19 response is unreasonable,” Bennet said.
Small communities like those in La Plata County are not eligible for the funding set aside for states and cities in a previous COVID-19-related bill, the CARES Act.
To offset some of the impact, Durango has deferred noncritical projects like remodeling the police station, and will furlough city employees not critical to the safety of residents for one day per week, starting in early May.
Mark Garcia, Ignacio’s interim town manager, said supplemental income revenue would be helpful for the town, which has managed to maintain all of its employees so far.
However, “June is when we will start seeing what those impacts are,” Garcia said.
Ignacio is deferring capital projects and other expenses that aren’t necessary, such as purchasing new police vehicles.
However, the town is still moving ahead with implementing a street signal at the intersection of Becker Street and Goddard Avenue.
Bayfield’s Town Manager Katie Sickles is waiting on more information from the state of Colorado to determine the exact toll COVID-19 will have on the town’s budget, which won’t be finalized until mid-May or June.
“There are still a lot of unknowns,” Sickles said.
Emily Hayes is a graduate student at American University in Washington, D.C., and an intern for The Durango Herald.
