$375M in rainy-day money: Why won’t city, county use it to ease COVID-19 economic pain?

With coronavirus forcing business closures and putting thousands of people out of work, Gaston County leaders decided to act swiftly.

They rescheduled more than $45 million in planned government construction projects so some work could start in days and residents could get jobs immediately.

“We just knew that we couldn’t wait 30, 45 days,” said Tracy Philbeck, chair of the Gaston County Board of Commissioners. “These people would lose everything they have.”

But in neighboring Mecklenburg County, residents have not received the same help.

Despite stashing about $375 million in combined cash reserves meant to be used in case of a severe economic downturn or another emergency, city of Charlotte and Mecklenburg County leaders have not approved relief measures for small businesses and residents like those seen in other cities and counties.

The federal government has pledged to send money to millions of Americans and small businesses as part of a $2 trillion stimulus package.

Public policy researchers, activists and elected officials say local government also bears responsibility for stabilizing the economy.

As the number of confirmed coronavirus cases has skyrocketed and the economy has slowed to a crawl, places around the nation such as Oklahoma City, Seattle and Orange County, Fla., have begun offering low-interest loans and grants to small businesses and providing grocery vouchers and rental assistance to residents.

Charlotte City Council and the Mecklenburg County Board of Commissioners have donated roughly $1 million apiece to a relief fund run by the Foundation for the Carolinas and United Way of Central Carolinas.

The county also leased motels for homeless residents who have suspected or confirmed cases or have been exposed to someone with COVID-19 — the illness caused by the new strain of the coronavirus.

But County Commissioner Mark Jerrell said he has received more than 100 emails from small business owners calling for local government to take more action to help them weather the downturn.

Advocates for the poor complain that Charlotte-Mecklenburg leaders have not provided enough relief to low-wage workers who lost jobs when the county ordered movie theaters, gyms and other businesses closed to slow transmission of the virus.

Thousands have applied for unemployment benefits from the state, but many face lengthy waits to get money needed for food, medicine and other basics, activists said.

“It is deeply disturbing because people are being harmed by inaction,” said Corine Mack, president of the Charlotte chapter of the NAACP. “Where are our leaders? What are they doing? How is it they are not redistributing the money to people who have been harmed?”

Charlotte City Councilman Braxton Winston said the council has not met in-person or electronically since March 16 despite the ongoing crisis.

“It’s hard to take action as a body if we don’t meet,” Winston said. “We have to change the way we go about our business.”

City and county administrators refused requests for interviews. They did not answer written questions submitted by the Observer.

“The City and County maintain unappropriated, or unassigned fund balance, in the general fund to provide for unforeseen expenses or emergencies,” the city and county said in a brief joint statement.

County Commissioner Susan Harden said officials have been primarily focused on protecting public health.

Mecklenburg County recently issued a stay-at-home order, which restricts nonessential travel, to slow the spread of the coronavirus, Harden said.

“We acted aggressively to save lives,” Harden said. “Now we are playing catch up with the economic piece.”

Business struggles

George Sistrunk, co-owner of Town Brewing Company just west of uptown Charlotte, says his business needs help immediately.

Town Brewery saw much of its business vanish last month when North Carolina Gov. Roy Cooper ordered dine-in service closed at bars and restaurants statewide in response to coronavirus outbreak.

Sistrunk said his brewery still provides take-out orders, but the slowdown forced him to lay off 15 of its 18 employees.

“It was overwhelming,” said Sistrunk, a Charlotte attorney, who has owned the brewery since September 2018. “It’s sad. We had built a business family.”

He said he applied to a recently unveiled federal program that is meant to help small businesses cover their payrolls for up to eight weeks, but is not hopeful he would benefit right away.

Sistrunk said his bank was still waiting on guidance from the government on how to make the loan. So many businesses are likely to apply, he said, he is afraid money for the program will dry up fast and some business owners won’t be helped.

“A combination of federal, state and local relief will be necessary to get us through this,” Sistrunk said. “We will need help beyond what the federal government can provide.”

Jerrell, the Mecklenburg County commissioner, said he has heard from dozens of small businesses struggling to survive.

He said county officials are considering a relief package that would give aid to small businesses, but he would not divulge details.

“For small business owners, it cannot come fast enough,” Jerrell said. “It is indescribable how much small businesses are hurting right now.”

Asked whether officials were responding too slowly, Jerrell said they are trying to design assistance that will have maximum impact.

Small business loans

Other communities have acted more quickly.

In the small city of Belmont, just west of Charlotte, leaders are offering emergency loans to small businesses.

As part of the “Keep the Lights on in Belmont” program, eligible businesses will be awarded amounts up to $10,000 to help cover operating expenses until state or federal assistance is available or until the economic crisis passes.

Belmont City Manager Adrian Miller said officials learned last Friday about a new way for local governments to make emergency loans to businesses.

By Monday, Belmont’s City Council had approved the program in a special meeting and the city started accepting applications the next day.

Belmont had received five applications as of Thursday, Miller said. Officials plan to start mailing out checks next week, he said.

“I can’t even comprehend what May is going to be,” Miller said. “But I know that our businesses aren’t going to make it to May without any help.”

Charlotte City Council member Matt Newton said city officials are working with the county and state on possible relief packages.

“We are assessing the full extent of our assets,” Newton said.

Newton would not say if he believed that local government had failed to act with enough urgency.

Through a spokesman, Mayor Vi Lyles refused comment.

Savings account

North Carolina recommends cities and counties sock away 8% of revenue in savings in case of an economic downturn or another emergency, which could reduce revenue or increase expenses.

Mecklenburg County, by policy, saves a minimum 28% of revenue and the city has a policy of maintaining 16% in reserves.

Mecklenburg has $259 million in uncommitted money in savings, according to the joint statement from the city and county. The city has $116 million in uncommitted savings, the statement said.

Mecklenburg commissioners in the past have discussed whether it is appropriate to keep such steep reserves when the county faces pressing needs such as a lack of affordable housing.

Charlotte-Mecklenburg officials should be using some of the surplus money to help workers who lost jobs and now struggle to meet their basic needs, said Mary Kelly, co-founder of Equitable Communities CLT, a social justice advocacy group.

“I don’t think we’re moving fast enough,” Kelly said. “These are unusual circumstances.”

Alexandra Sirota, director of the Budget and Tax Center for the North Carolina Justice Center, a Raleigh-based advocacy organization, said government leaders should be moving to protect workers and other residents from the worst effects of the economic slowdown.

“People are feeling the pinch from lost jobs and wages,” Sirota said. “If there are dollars available, they should be put towards people first and protecting people from harm.”

But the coronavirus has led to unanticipated costs for local governments and the ongoing economic crisis will cause sales tax revenue to drop, said Scott Mooneyham, director of political communications and coordination for the North Carolina League of Municipalities.

That means local governments may need to reduce spending for vital services such as fire and police, Mooneyham said.

“People need to realize this is going to hit them,” Mooneyham said. “Even the largest cities in this state are going to face a financial crunch.”

Wait for federal help?

The Internal Revenue Service plans to send payments to tens of millions of Americans starting late next week as part of the federal stimulus plan, but some won’t receive money for months because the government lacks their banking information, according to a report from The Washington Post.

Philbeck, the chair of the Gaston County Board of Commissioners, said officials need to act quickly to ease hardships faced by residents and local business until federal help arrives.

“What we decided is that many citizens can’t wait a month,” Philbeck said. “There’s a lot of people who live paycheck to paycheck. So, we decided that counties and cities are more flexible than big government.”

This story was originally published April 5, 2020 at 11:06 AM with the headline "$375M in rainy-day money: Why won’t city, county use it to ease COVID-19 economic pain?."