Making Smart Investments with Stimulus Funding
With the passing of multiple relief bills, large amounts of federal and state money have been infused into local governments to combat the lingering economic effects of COVID-19 shutdowns.
It is incumbent upon governments to approach this rare moment responsibly, with an eye toward strategic long-term sustainability. Smart investments can make transformative progress and ensure that structural gaps are narrowed and closed in our budgets and our communities.
There are several ways in which local governments can make smart decisions to improve municipal finances. An economic recovery that helps people will lead to a more sustainable recovery for our County government's finances as well.
It appears that Nassau County will be ending fiscal year 2020 with a surplus rather than a deficit. This is largely due to the infusion of federal CARES Act dollars, proactive measures taken by the County related to debt service costs, and a lower than expected impact scenario on sales tax.
The Comptroller’s Office is responsible for preparing and issuing the County’s financial statements and is currently working on the 2020 annual financial report, which is expected to be issued by June 30, 2021. The 2020 report will provide details on how Nassau County finished the year, and provide the County’s official audited fiscal year results.
American Rescue Plan Act
With the signing of The American Rescue Plan Act of 2021 (“ARPA”) into law (1), Nassau County is expected to receive an infusion of $385 million from the $1.9 trillion package.
ARPA funds will be issued in two tranches to local governments to be used in the 2021 and 2022 budgets. All funds must be spent by the end of calendar year 2024.
The United States Treasury Department has issued an Interim Final Rule with guidance for using ARPA funds, while seeking comments on this guidance until mid-July 2021. The report will detail ways that Nassau County can apply these funds responsibly, with an eye toward strategic long-term sustainability.
Smart investments can make transformative progress and ensure that structural gaps are narrowed and closed in our budgets and our communities.
Let's Get Local: Making Smart Decisions in Nassau County
The Government Finance Officers Association asserts that the funding provided under ARPA provides a unique opportunity for state and local governments to make strategic investments in long-lived assets, rebuild reserves to enhance financial stability and cover temporary operating shortfalls until economic conditions and operations normalize.
While the $350 billion heading to state and local governments is an incredible opportunity for not only relief but growth, governments may fall into budgetary traps if they make the wrong decisions with the non-recurring funds. Care should be taken to avoid creating new programs or add-ons to existing programs that require an ongoing financial commitment.
We have illustrated in past Policy and Research reports that Nassau County’s long-term financial success relies upon ensuring that there are opportunities for all. By embracing innovative and proactive solutions, we can help ensure Nassau County’s long-term financial success by making smart decisions to improve municipal finances, help people make a real difference and also lead to a more sustainable economy.
Small Business Majority, an advocacy organization focused on supporting small businesses, has supported policies including rent relief programs, unrestricted grant assistance (prioritizing the smallest of businesses, such as those with 20 employees or less), funding for greater technical assistance to small businesses, and a moratorium on some licensing and permitting costs. Many other organizations have also advocated for common-sense solutions we can capitalize on to seize the moment.
How Nassau County Can Make Smart Investments
- Invest Money to Reduce Operating Costs
- Make Overdue Investments in Technology Infrastructure
- Make Investments in Our Residents
1. Invest Money to Reduce Operating Costs
We've illustrated in the first volume of our What's the Issue Series about infrastructure how Nassau's deferred infrastructure investments will only cost the County in the long-run. Now is an opportunity to make long-overdue investments in infrastructure. Smart projects that wouldn’t have been possible before - but are now possible due to stimulus money - can drive economic growth, allowing the County to get a return on investment on these dollars and ultimately putting Nassau County on the path to long-term sustainability.
Making Infrastructure Investments
On Long Island, our infrastructure challenges require improvements and investments in projects that can provide additional capacity to heavily traveled transportation corridors and vitalize the efficiency of the region’s transportation system. The COVID-19 pandemic has created an urgency to invest in much-needed infrastructure. The uncertain access to financial markets and the lack of borrowing in 2020 have constrained Nassau County's 2021-2024 Capital Plan (2). Large-scale infrastructure improvements were re-sequenced to late 2021 with the expectation of reduced funding.
Twelve Priority Projects
Recently, Nassau County Executive Laura Curran joined with labor leaders to call for a $583 million federal infrastructure stimulus to advance twelve priority projects. Funding these projects with stimulus money would create (3):
The Long Island Regional Planning Council has predicted that substantial regional land uses will likely be altered significantly in its recent "Land-Use Impacts Post COVID-19" study. Increased demand for multi-generational housing and “pop-up” retail in downtowns with significant vacancies are among the study’s key predictions, along with the need for updated zoning laws reflecting work-from-home needs (4).
In the four decades between 1970 to 2010, the number of people on Long Island that live alone increased by 65%, while the number of married families with children decreased by 28% (5). These shifts have created more demand for centrally-located housing units geared toward single people and non-married couples. A 2016 Long Island Index survey found that 15% of Long Islanders either live in an apartment, condo, or townhouse and 29% want to live in one of those options within five years (6).
This demand for alternative housing options, namely rental units, far outpaces the supply. A 2013 Long Island’s Rental Housing Crisis report found that 64% of renters cannot afford a typical two-bedroom apartment, and that much of the cause is attributable to how little multi-family housing has been built in Nassau and Suffolk Counties (7).
To read more about how Nassau's ever-increasing amounts of vacant underutilized land include obsolete or decommissioned sumps and vacant strip malls can be re-imagined to meet the housing needs of the future, please check out our Local Economic Acceleration Series and Modernizing "The Deal" of Living in Nassau County.
2. Make Overdue Investments in Technology Infrastructure
During the pandemic, governments began to invest in technology like video conferencing to keep public meetings accessible, and with governments conducting more business online, there has been an increased concern about cyber-threats.
Leveraging this unique opportunity with both short-term priorities and long-term needs in mind, Nassau County should make overdue investments in technology and cybersecurity and save unnecessary pain in the future.
Enterprise Resource Planning
For decades, Nassau County has used a now-obsolete computer system to manage more than $3 billion annually in County spending, including the payroll for 14,000 employees of the County and Nassau Community College. This system, based on computer coding from 1992 and no longer supported, wastes staff time creates inefficiencies, and would severely hamper the ability for the County to operate in the event that the system fails.
Nassau County’s current financial system cannot efficiently produce GAAP-compliant financial statements. A past report issued by the County’s independent external auditor described the issues with this system and classified them as a “material weakness” in the County’s internal control over financial reporting. The implementation of an adequate accounting and reporting system will provide many benefits to the County.
Over the first three years, the Comptroller's Office made successful advances toward replacing the County's legacy mainframe-based financial system and implementing a new Human Resource application. To read more about this process, please read our Three Years in Review highlight
3. Make Investments in Our Residents
Nassau County should explore using some of the money on social services and small businesses in a way that helps address short-term needs, while leveraging this unprecedented infusion of cash to make an equally unprecedented commitment to equity.
Relief for the Middle Class
Nassau County Executive Laura Curran has proposed sending direct cash payments of $375 to some 300,000 County property owners, using $100 million in pandemic aid from the federal government (8).
The County would use funding from the American Rescue Plan Act to send out individual payments to property owners who receive the STAR or enhanced STAR exemptions, which are generally households earning up to $500,000 and $88,050 or less respectively.
Increase Access to Child Care
New York State ranks 6th in the nation as having the most expensive infant care. Child care for an infant costs $7,930 (112%) more per year than in-state tuition for a four-year public college (9), which makes New York one of 33 states where infant care costs more than public college tuition.
Child care is a critical factor that propels or stalls economic development. Parents that have access to reliable child care are able to be more productive and miss less time at work, which can help foster opportunities for upward mobility. In simple terms, access to affordable child care allows more family members the opportunity to earn more income and also helps close the gender wage gap.
With COVID-19 exacerbating this challenge, and even shedding light on how dependent many families already were on our education system to effectively serve as child care, our report The Child Care Gap: How the Price of Child Care Impacts "The Deal" of Living in Nassau County takes a critical look at the issue.
The New York State FY 2022 Budget includes a historic $5 billion investment in child care through both state and federally funded initiatives designed to restart our economy, support essential workers and child care providers, and improve access to quality, affordable child care for all eligible working New York families (10).
Help Small Businesses
In another effort to provide a major boost to businesses as they continue to struggle with the impact of the COVID-19 pandemic, Nassau County Executive Laura Curran proposed a major business recovery program to direct approximately $25 million in American Recovery Plan (ARPA) funds to grants, loans and assistance to Nassau’s downtown businesses (11).
The major healthcare inequities unmasked by COVID-19 and the continued disparate treatment of people of color in America make it clear that now more than ever is the right time to address major inequality issues within our society.
Our Office’s Equity Gap Toolkit report highlights data demonstrating that there are clear equity gaps that must be closed. In addition to ensuring a more just society, closing these gaps could have a clear economic benefit.
Nassau County's Not Alone: Best Practices Around the Country to Embrace Opportunity and Limit Risk
For many local governments, the CARES Act and ARPA funding are substantial and could be transformational in their recovery efforts. Local leaders will need to decide how to best use the funding while being consistent with the federal requirements. Financial experts and think tanks around the country are providing recommendations to ensure the long-term value of investments and financial stability of its government using the one-time infusion of federal resources. Think tanks, such as Citizens Budget Commission, National Association of Counties (NACo), and Fiscal Policy Institute, recommend the following general guiding principles:
The four blocks below detail these best practices and some localities that are putting them to use and achieving results.
1. Provide Accountability by Sharing Data on the Use and Impact of Federal Funds
City and County of Denver, Colorado
Denver established a public dashboard that would allow all program expenditures to be tracked and disseminated online. The dashboard demonstrated a breakdown of actual and committed spending by county departments (12).
Howard County, Maryland
Howard County created a CARES Act spending dashboard to track the actual and projected spending of federal funding in the interest of transparency (13).
2. Invest in Workforce Development:
Hillsborough County, Florida (Coronavirus Relief Fund allocation: $256,847,065)
Hillsborough County allocated between $30-$60 million towards economic recovery programs and workforce training. The funding was administered in the form of grants to assist County residents in hardest-hit industries in retaining skills for in-demand industries and occupations, providing all necessary training materials and equipment, and funding paid work experience programs for displaced workers (14).
Ramsey County, Minnesota (Coronavirus Relief Fund allocation: $96,026,770)
Ramsey County released contracting opportunities for non-profits to provide workforce-related services to people of color, people with disabilities, and veterans. Organizations focused on ending racial and socioeconomic disparities were encouraged to apply. Nearly 300 participants were known to have secured employment in the CARES Act Workforce Development funded programs. An additional nearly 300 participants increased the number of hours worked or wages paid (15).
3. Invest in Closing Equity Gaps:
Gwinnett County, Georgia (Coronavirus Relief Fund allocation: $163,368,000)
Gwinnett County allocated a portion of the funds towards its COVID-19 Grant Funding Opportunity Program. The County encouraged nonprofit organizations to apply that had traditionally addressed critical needs within the community, such as emergency food assistance, house and emergency shelter, child care, transportation, and health care services. The County granted a total of $36 million in assistance to more than 233 nonprofit and faith-based agencies in the program's three rounds of application cycles (16).
Fairfax County, Virginia (Coronavirus Relief Fund allocation:$387,176,021)
Fairfax County allocated up to $30 million towards its temporary Small Business and Non-Profit Relief Grant Program that helped small businesses and nonprofits impacted by COVID-19. Administered by the County Executive, the grant program sought to address gaps that may exist among complementary programs at the county, state, and federal level and provide targeted assistance to small, minority-owned businesses that were historically less likely to be approved for federal support (17). By the end of the program, the County reported that more than 72% of the grant recipients identified as organizations owned by women, minorities, and/or veterans (18).
Support Temporary, Targeted Efforts that Address Hardships of the
Pandemic and Focus on Areas Not Supported by Federal and State Programs:
Honolulu County, Hawaii (Coronavirus Relief Fund allocation:$387,176,021)
Honolulu County allocated a portion of the funds towards community services. This was administered through the form of grants that provided funding for shelters, homeless prevention, rapid re-housing, and other support services. Honolulu County also provided an additional $8 million to support efforts such as homeless prevention, food security, mobile COVID-19 testing, eviction prevention, acquisition for homeless clinics, drug treatment, and financial hardship relief (19).
Dallas County, Texas (Coronavirus Relief Fund allocation:$239,952,373)
Dallas County allocated funds to its Food Pantry Assistance program that provided one-time grants of up to $15,000 to county food banks, food pantries, soup kitchens, and community cupboards impacted by the COVID-19 pandemic. The selected organizations were given reimbursements through the program at $2 per pound of food distributed from March to September 2020 (20).
Strike While the Iron is Hot
Trillions of dollars worth of Federal and State money has been infused into local governments to combat the lingering economic effects of COVID-19 shutdowns. It is incumbent upon governments to approach this rare moment responsibly, with an eye toward strategic long-term sustainability. Smart investments can make transformative progress and ensure that structural gaps are narrowed and closed in our budgets and our communities.
The funding provided under ARPA provides a unique opportunity for state and local governments to make strategic investments in long-lived assets, enhance financial stability and cover temporary operating shortfalls until economic conditions and operations normalize.
In the meantime, if there are issues that you think the Policy and Research Team should look into, or you have comments on our office’s work, please feel free to reach out to us directly at ReportItReformIt@nassaucountyny.gov
1. "American Rescue Plan Spending: Recommended Guiding Principles." Coronavirus Response Resource Center, the Government Finance Officers Association (GFOA), 2021, https://www.gfoa.org/american-rescue-plan-spending-guiding-principles.
2. "Curran Releases Proposed 2021-2024 Capital Improvement Plan." Nassau County County Executive News, Office of the Nassau County Executive, 16 Oct. 2020, https://www.nassaucountyny.gov/CivicAlerts.aspx?AID=8540.
3. "Curran Calls on Washington for Infrastructure Stimulus for 12 Large Scale Improvement Projects." Nassau County County Executive News, Office of the Nassau County Executive, 14 Nov. 2020, https://www.nassaucountyny.gov/CivicAlerts.aspx?AID=8684.
4. 4ward Planning. (2020). Land-Use Impacts Post Covid-19: Preparing the Comp Plan for Near- and Long-term Trends. Retrieved from https://secureservercdn.net/184.108.40.206/1da.948.myftpupload.com/wp-content/uploads/2020/09/Land-Use-Impacts-Post-Covid-19-Long-Island-FInal.pdf?time=1602268588.
5. Regional Plan Association, Long Island Community Foundation, and Ford Foundation. (2018). Long Island Index 2018 Report. Retrieved from http://www.longislandindex.org/wpcontent/uploads/2018/04/COMMUNITIES_Index2018Report1.pdf.
6. "Long Island Index 2018 Report." Regional Plan Association, Long Island Community Foundation, and Ford Foundation, Long Island Index, 2018, http://www.longislandindex.org/wpcontent/uploads/2018/04/COMMUNITIES_Index2018Report1.pdf.
7. Lewis, Neal. "Long-Running Fight Over Downtown Development Finally Turns a Corner." Long Island Index, 26 Sep. 2016, http://www.longislandindex.org/2016/09/26/long-running-fight-over-downtown-development-finally-turns-a-corner/.
8. Eidler, Scott. "Laura Curran Proposes $375 Payments for 300,000 Nassau Property Owners." Newsday, 17 May 2021, https://www.newsday.com/long-island/politics/curran-nassau-375-cash-payments-1.50249256.
9. "The Cost of Child Care in New York." Economic Policy Institute, 2019, https://www.epi.org/child-care-costs-in-the-united-states/#/NY.
10. "Governor Cuomo Announces FY 2022 Budget Invests an Historic $5 Billion in Child Care, Fulfilling Many Recommendations Included in Child Care Availability Task Force Report." The Office of the Governor, the State of New York, 4 May 2021, https://www.governor.ny.gov/news/governor-cuomo-announces-fy-2022-budget-invests-historic-5-billion-child-care-fulfilling-many.
11. "County Executive Laura Curran Proposes Major Boost for Nassau’s Business Recovery." Nassau County County Executive News, Office of the Nassau County Executive, 19 May 2021, https://www.nassaucountyny.gov/CivicAlerts.aspx?AID=9159.
12. "Financial Dashboards." The City and County of Denver Government, 2020-2021, https://www.denvergov.org/Government/COVID-19-Information/Public-Orders-Response/Response-Plans/Finance.
13. "Howard County CARES Act Funding for COVID-19 Relief." Office of Public Information for Howard County Government, 2020-2021, https://www.howardcountymd.gov/Departments/COVID-19-Coronavirus-Countywide-Updates/CARES-Act-Spending-Dashboard.
14. "CARES Act." CareerSource Tampa Bay, Florida, 2020, https://www.careersourcetampabay.com/cares-act/.
15. "CARES Workforce Development." The Ramsey County Government, Minnesota, Mar. 2021, https://www.ramseycounty.us/sites/default/files/Projects%20and%20Initiatives/Coronavirus/COVID-19/CARES%20Workforce%20Development%20Executive%20Summary.pdf.
16. "COVID-19 Nonprofit Funding Opportunity Awards." Grants, Gwinnett County Government, 2020, https://www.gwinnettcounty.com/web/gwinnett/departments/financialservices/grants#:~:text=COVID%2D19%20Nonprofit%20Funding%20Opportunity%20Awards&text=Through%20its%20Round%203%20application,nonprofit%20and%20faith%2Dbased%20agencies.
17. "COVID-19: Small Business Resources." COVID-19 Emergency: Information, Resources and Assistance for Businesses, Fairfax County Economic Development Authority, 2020-2021, https://www.fairfaxcountyeda.org/about-fceda/covid-19-response/covid-19-small-business-resources/.
18. Waseem, Fatimah. "Fairfax County RISE Program Awards Over $52 Million to Small Businesses." RestonNow, 14 Dec. 2020, https://www.restonnow.com/2020/12/14/fairfax-county-rise-program-awards-over-52-million-to-small-businesses/.
19. "Coronavirus Aid, Relief, and Economic Security Act (CARES Act)." Economic Assistance and Revitalization Committee, City and County of Honolulu, 13 May 2020, https://honolulu.granicus.com/MetaViewer.php?view_id=3&clip_id=1313&meta_id=138549.
20. "Dallas County Food Pantry Assistance Program." The County of Dallas, State of Texas, 4 Aug. 2020, https://www.dallascounty.org/cares-act/food-pantry-en.php#:~:text=If%20assistance%20is%20needed%2C%20please,organization%20providing%20food%20pantry%20services.