Local governments turn to furloughs to get through COVID-19 pandemic

A Meridian Township playground is closed during the COVID-19 crisis. Many local governments say big cuts to parks, police and roads are coming without aid from Congress. | Susan J. Demas

COVID-19 is severely impacting the budgets of local governments in Michigan, and that’s led to widespread furloughs throughout the state.

During a conference call with leaders of the Michigan Municipal League (MML) on Thursday, mayors and a city manager from different parts of the state described the drastic cuts they’re making because of COVID-19.

“I’ve furloughed 137 employees that worked in city government, the district court and the library,” said Westland Mayor and MML Vice President William Wild. “We’re spread pretty thin here.”

Wild said making those cuts will help save the city of Westland, located in Southeast Michigan, about $250,000 per month.

Wild isn’t the only one who’s had to cut staff. 

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Midland Mayor Maureen Donker said about 28% of the city’s workforce has been furloughed. Muskegon Mayor and MML board member Stephen Gawron said 31% of the city’s budgeted positions have been either furloughed, laid off or removed from the city budget altogether. Kalamazoo City Manager Jim Ritsema said about 25% of city employees will be furloughed next week.

However, the pending $3 trillion-plus HEROES Act, which the Democratic-controlled U.S. House is slated to vote on Friday, could provide some much-needed relief to Michigan and other states. However, it faces uncertainty in the GOP-led Senate.

The bill would provide almost $1 trillion in aid to state, local, territorial and tribal governments, which are facing massive revenue losses as a result of shutdown orders, as previously reported by the Advance.

The funding is intended to help governments continue to fund police officers, firefighters, teachers, school administrators, health and sanitation workers and other public sector employees.

During Thursday’s call, officials were quick to point out they didn’t see the legislation as a bailout, but as a partnership to help Michigan cities.

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“We’re looking for the government to support us,” said Gawron, “We cannot leave cities like Muskegon or other communities to deal with the brunt of the fiscal impact. We need partnership now.”

The members of MML are hopeful that the bill is passed, since the National League of Cities (NLC) ranked Michigan as the fourth-worst state in terms of projected revenue loss at the local level in a report released Thursday.

NLC projects that Michigan will see a 37% revenue loss to local units of government due to the pandemic, which worries Wild.

Wild said the city depends on revenues generated by building permits, park rentals and ice area rentals, which have become nonexistent due to COVID-19.

“The city’s revenues have pretty much disappeared,” said Wild. 

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Summer taxes also generate revenue for the city, but Wild is concerned businesses and residents won’t be able to pay them, forcing the city to dip into its $6 million rainy day fund. 

Another area of concern is revenue sharing, or the distribution of a portion of federal tax revenues to state and local governments.

Things don’t look any better at the state level amid a likely recession, however.

Michigan has been projected to see up to a $7 billion revenue hit over the next two years due to COVID-19. State fiscal estimates will meet Friday morning to give their formal estimates at the Consensus Revenue Estimating Conference (CREC).

MML members met with state Senate Appropriations Chair Jim Stamas (R-Midland) this week to get more information about what cities can expect to see from the state in the budget process. 

“[Stamas] was quite pessimistic about what the numbers look like,” said MML CEO and executive director Dan Gilmartin. “We are highly concerned about that.”