Athens has lost $15.5 million in coronavirus relief funding due to Governor Brian Kemp’s reluctance to raise taxes.
This month, Kemp informed Georgia cities that the expected second round of stimulus funding would not be coming, news which could be devastating to their already strained budgets.
Congress passed the CARES Act in March to provide emergency relief to Americans struggling with unemployment and reduced income due to the coronavirus lockdown. Georgia’s share of this relief package was $4.1 billion, which included $1.85 billion for local governments. The five biggest cities in Georgia received $570 million of that in funding direct from the US Treasury, which left $1.23 billion for smaller cities like Athens to be distributed by the state.
Kemp divided the funding for small cities up into installments, with 30% delivered between July and September (“Phase One”) and the remaining 70% to be distributed before the end of the year.
Athens’ share of phase one was $6.64 million, which allowed funding for fare-free transit, small business grants, housing and food assistance as well as some additional expenses incurred by the local government in its fight against coronavirus. Yet, Athens was expecting almost $15.5 million more which will not be arriving.
Two weeks ago, Kemp’s office announced that the money would be used instead to support the Unemployment Insurance Trust Fund, which has been under increasing pressure as the recession continues. The Georgia Department of Labor has already been forced to borrow from the federal government to continue making unemployment payments. If CARES Act funding had not been diverted to unemployment insurance, Kemp’s office argues that taxes would need to be raised to make up the difference.
The Governor’s Office claims that Georgia businesses saved an average of $350 per worker per year in reduced tax payments due to the transfer of stimulus funding.
Mayor Kelly Girtz expressed frustration with this decision in a comment to APN. “New data this week indicates that over 20% of Black renters are in arrears, so clearly the need is great, and it is frustrating that funds for critical community needs will now be undelivered. All of this at the same time that the Affordable Care Act Medicaid expansion is not fully funded in Georgia, and with medical debt a significant source of families’ financial insolvency. It all adds insult to injury,” Girtz said.
Girtz added that while state Departments of Labor may call on their federal counterpart in case of an emergency, localities in trouble often have nowhere else to turn.
Larry Hanson, Executive Director of the Georgia Municipal Association, also issued a statement about this funding switch. “We certainly understand the importance of the stability of the Unemployment Trust Fund, but we are disappointed that the decision to solve this issue comes at the expense of local governments and local needs,” Hanson said.
Athens’ local government may be in good shape financially, but many municipalities could be hard hit by this sudden withdrawal of funding. Kemp sent a letter to local governments in June which strongly implied there would be future distributions past phase one, although he stopped short of making that an explicit promise.