A year of COVID: Municipal spending undeterred by virus

  • A woman pays for a parking pass in downtown Concord in 2017. Parking fees were one area that many municipalities saw a clear drop in income as fewer people ventured out. Monitor file

Monitor staff
Published: 3/11/2021 6:07:42 PM

When COVID-19 hit New Hampshire, the first priority for Karen Hambleton was purely pragmatic.

A deadly virus whose methods of transmission were still unknown had arrived in Bradford, and Hambleton, the town administrator, just wanted to keep the doors open.

As she worked to open socially distanced registrations at town offices and scrambled to gather masks for her staff, Hambleton didn’t have time to stress over the long-term financial implications of a national lockdown for the town. But the concerns were there.

Restaurants at first were forced to shut down indoor dining and months later, many closed for good. Other businesses began shedding employees or mandating furloughs to cut costs. Yet, town, cities, school districts and even state government have emerged relatively unscathed, avoiding the financial carnage the pandemic levied on the private sector. Budgets and government spending, by and large, continue to go up. Besides school staff and teachers, the numbers of government employees – and their cost to taxpayers – hasn’t decreased.

An aggressive financial aid packaged passed by Congress last March intended to assist businesses and residents, from enhanced unemployment payments to loans and aid to local businesses – was also used to buoy local governments.

“Last year was a really interesting year,” Hambleton said. “In the end, when you look at all the bottom lines of things, revenues remained consistent with years’ past. They trended up slightly.”

Some economic trends, like an influx in out-of-staters fleeing cities, have provided an unexpected boost. In Bradford, home construction and development exploded – a boon to the town in the way of building permits.

Up north, in Lincoln, the picture was similar. With hotel constructions plowing ahead, the town is now grappling not with a shortage of economic opportunity, but a shortage of workforce, town manager Butch Burbank said during a conference call this week.

The results have varied town by town. Some, like Greenfield, have been financially devastated by pandemic-related developments like the closure of Crotched Mountain School. Others have scraped by, neither thriving nor suffering.

But the overall result appeared consistent: In interviews with the Monitor, no New Hampshire town officials said they needed to institute harsh measures to curb the pandemic and many have been moving forward into town meeting season with relatively healthy budgets with fairly usual property tax increases.

“Initially in March, when everything shut down, there were really big concerns about loss of revenue, property tax delinquencies, water and sewer collection delinquencies, motor vehicle (revenue),” said Becky Benvenuti, government finance advisor for the New Hampshire Municipal Association. “That has sort of leveled out.”

The situation didn’t look so rosy in the initial months. As the pandemic descended on New Hampshire, town managers initially had little time to think of tax and revenue implications months away. The first priority, managers say, was to keep services going.

Using about $32 million in federal money allocated by the state to offset COVID-related costs, towns set to work installing clear plastic barriers, stocking up on personal protective equipment, buying cameras and monitors for Zoom calls, and upgrading their WiFi to support the new demands.

For many towns, that federal funding came quickly and made them whole.

The onset of the pandemic brought other concerns. With many in the state suddenly unemployed, town officials worried about the ability of residents to pay property taxes. And with tight conditions for restaurants leading to worries of mass closures, rent from commercial buildings was equally uncertain.

Then there was the question of car registrations. Early on during the pandemic, New Hampshire Division for Motor Vehicles had allowed a grace period for new registrations – extending everyone’s obligations until June 2020. Town officials in turn prepared for a dip in a crucial revenue source.

But in many Granite State towns, tax revenues barely dropped at all. And registrations, while somewhat lower, largely continued apace. As a result, spending remained healthy as employees got contractual raises, overtime continued steadily, and contributions to the state retirement system continued to rise.

A survey by the Municipal Association of towns found that motor vehicle registration revenue actually increased by an average of 1%, and that towns suffered far fewer property tax delinquencies than feared – less than 1%. The survey received responses from 69 of the state’s 234 towns and cities.

Towns didn’t emerge unscathed. Fewer people shopping meant drops in parking revenues, the survey showed. Many towns worried that parking fees and building permit fees would take a hit. In Concord, for example, despite fewer cars downtown, the city has continued to enforce its expanded metered area along with fines that were increased just before the pandemic struck.

Additionally, if the end of the last year showed relative financial stability, the journey to get there has been anything but predictable, Benvenuti added.

Throughout 2020, federal aid packages ebbed and flowed. A $600 a week federal unemployment expansion ran out in summer, around the same time as a state moratorium on rent-related evictions. Businesses soon ran through the available Paycheck Protection Program federal funds as well as the state-administered “Main Street Relief Program.”

After passing a stimulus and relief package in March, Congress took until December to follow up with a second round.

But when that stimulus did arrive, to both individuals and businesses, it made a mark. The relative ease that towns are now experiencing with balancing budgets is a result of the aid, Benvenuti said.

“I think that it’s directly attributable to that,” she said. “The (aid) that the whole economy, businesses and individuals have been receiving.”

Though towns have weathered their worst fears, some are still worried about the months ahead.

While property taxes have stayed steady, some of that stability could be due to personal savings from residents last year, making it easier to make the initial tax payments, town managers suggested. The next local tax due date in July, could see delinquencies rise, as households have run out of the financial cushions they had before.

And while the 69 towns and cities surveyed by the Municipal Association logged only $147,607 in total budget shortfalls in the last year, the same towns projected a $2.1 million shortfall in the next year.

To cope with those potential losses, the Association has recommended towns consider cost-cutting measures such as delaying infrastructure projects and road repairs, reducing library services and considering a hiring freeze.

“It is clear the pandemic continues to have a very significant impact on municipalities’ revenues and expenses and will continue to require extraordinary measures to address these budget shortfalls,” the Association said in its re port.

Ken Robichard, town administrator of Northfield, isn’t so worried. For the town’s board of selectmen, at least, the worst of the pandemic had passed them by.

“We were really hesitant going into December, thinking ‘OK, let’s come up with a plan,’ ” he said. “’If the revenue doesn’t come in, we’re going to have to implement something.’ We were getting our plan together, we were getting ready for it, and it never happened.”

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