All of this — government operations, extra cleaning supplies, wavering budgets — costs taxpayer money. And, sooner or later, local and state leaders are going to have to figure out how to cover gaps in budgets that can’t always take a pandemic and keep moving ahead.
What’s the plan?
Sometimes the price is an easy figure to tally. Grand Forks Public Schools’ plan for resuming classes, for example, will likely cost about $3.5 million to $4 million, mostly due to a combination of high-stakes deep-cleaning procedures and extra distance learning technology. The federal CARES Act is taking a big bite out of that cost.
But School Board member Shannon Mikula has concerns about costs that are harder to count. In both North Dakota and around the country, the economy is strained, joblessness is up and — as of this writing — expanded federal unemployment benefits have lapsed. Mikula is worried that lapse could soon find its way back to the district’s revenues — and its ability to serve students.
"We need something,” Mikula said. “We have to figure out something. It can't just be (a case of) ‘we've sustained and now we're just going to let it fall off a cliff.’”
Other local leaders harbor their own concerns. Grand Forks City Administrator Todd Feland points out that the slowdown will change the schedule for financial assistance under the state’s big infrastructure funding program, Operation Prairie Dog. Grand Forks County Commissioner David Engen said that the financial sky isn’t falling — like some observers had feared might happen — but that the county has similar questions about flood response and infrastructure dollars.
The coronavirus may have created a public health crisis, but local leaders underscore that it’s creating public finance questions. Oftentimes, that problem doesn’t have easy solutions, as state and federal officials still try to find their way through the fiscal years ahead.
"I think the state is going to be faced with a need to prioritize in a way they never have,” Mikula said. “Our state went through a number of downward trends, but I don't think anybody's seen anything get so bad so quickly and stay bad for such a protracted period of time."
‘That’s going to be too late’
Amid all the worrying, there’s some good news: coronavirus does not appear to have hit North Dakota’s economy quite so hard as the worst mid-March predictions imagined. In Grand Forks, for example, sales tax collections are holding steady, with $14.78 million collected so far this year; that’s up more than $1.3 million over this time last year, according to city documents. The same is true of state sales tax income, and recently released documents show it’s 9% above June estimates for general fund revenues. That’s a heartening sign that consumers are still spending.
But UND economist David Flynn said the worst could be yet to come. It’s unclear how much those numbers hide big changes in consumer spending, for example. Sales tax income could be high as workers refit their homes or buy laptops for remote offices. That kind of spending likely won’t last.
And even if consumers are spending the same amount of money, they could be doing it in ways that will cause problems ahead. If North Dakotans go to fewer restaurants but buy more food, for example, they could be spending just as much — but still seeding the collapse of the local restaurant industry.
There are plenty of numbers that show an impact already. Those same state financial documents show North Dakota’s general fund revenue running nearly 6.5% ahead of estimates in March. That figure sat at 2.15% in June, though. And oil and gas tax allocations are down 15% from their rolling biennial projections — a deeply worrying figure that appears poised to get worse.
In June, state Democrats asked for a special session, arguing that the full Legislature should decide how to spend the state’s federal assistance. They also proposed a bonding bill that would take advantage of historically low interest rates and keep infrastructure construction running during a downturn.
They’ve held to that argument through the summer. In an interview this week, state House Minority Leader Josh Boschee, D-Fargo, expressed frustration with Republicans over cuts to energy and income taxes over the last decade, and wondered why GOP leaders hadn’t given legislators the chance to meet and debate a response plan.
"I look forward to finding ways that we can make sure that as schools open, our children are safe, our teachers are safe,” Senate Minority Leader Joan Heckaman, D-New Rockford, said. "... All of those things are things that we need to be very aware of right now, and we aren't going into session until January. For some of these needs out there, that's going to be too late.”
But state Republican leadership said this week they’re confident the state will make it to the January session on the resources it has, arguing that revenues have not been eroded enough to merit a special session.
“We are sitting, financially, pretty well to finish up the biennium,” Senate Majority Leader Rich Wardner, R-Dickinson, said. “We will easily get to the regular session before we have to deal with these issues.”
And Mike Nowatzki, a spokesman for Gov. Doug Burgum, added that the state’s Emergency Commission is already working to send relief to local governments, approving about $59 million to go to city and county law enforcement payrolls — an important counterweight against pressures on local budgets.
State House Majority Leader Chet Pollert, R-Carrington, though, points out that there are still rough waters ahead.
“That’s going to be the crunch,” he said. “It’s not (the 2019-21 biennium that is the most pressing issue.) It’s ’21-’23.”
Haste over waste?
One critical question is what happens next with federal funding. As of this writing, congressional leaders were still deadlocked on a deal for another round of coronavirus funding, even after emergency unemployment benefits had expired.
North Dakota’s congressional leaders have recently struck an optimistic tone. Sen. Kevin Cramer, R-N.D., pointed out a Republican proposal to offer federal assistance to help schools reopen classrooms. Rep. Kelly Amrstrong, R-N.D., said he’s glad to see the state standing on solid ground, with access to the Common Schools Trust Fund and the Legacy Fund and CARES Act funding still waiting to be spent.
Sen. John Hoeven, R-N.D., also referred to North Dakota’s CARES package, and said work continues “to ensure that states have flexibility” in spending it.
“We need to ensure that the resources that we have already provided, including the $1.25 billion relief fund, are being utilized as effectively as possible so we can identify remaining needs and ensure that any additional assistance is a targeted and responsible use of taxpayer dollars,” Hoeven said in a statement provided by his office.
But Flynn, the UND economist, said it’s best if federal leaders move quickly. Consumers are watching for what comes next — and even the ones who have means might not be as willing to spend if they think there are rough waters ahead.
"I think that the biggest thing I'm getting out of this is that it's not timely, not coordinated in a meaningful way and is essentially going to boil down to, whatever results, to just blanket throwing money at problems,” he said. “While that may be helpful, the delay is not.”
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'We need something': COVID budget crunches weigh heavy on schools, cities, state - Grand Forks Herald
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