All Things Political: Immediate ways to replace local government revenue lost to COVID-19

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The COVID-19 recession is here, and it’s severely affecting the budgets of all local governments. Nassau County is projecting a loss this year of roughly $320 million in revenue, from its $3.55 billion budget.

Towns, cities, and villages across Long Island have diminished revenue from commercial garbage fees, mortgage recording taxes, building permits, and park and recreation fees.

At the same time, local government expenses are higher from their COVID-19 emergency response. Every municipality also has to prepare for next year’s projected jump in health care costs and a spike in pension contributions.

It looks like most local municipalities won’t receive Federal government bailout money, and New York State, who didn’t sock away nearly enough money in their rainy-day fund, is threatening to cut $8.2 billion that was budgeted this year for local governments.

The $103 million in one-shot Federal pandemic funding Nassau received won’t come close to filling their 2020 budget deficit. Hempstead was the only town to receive federal pandemic funding, $131 million, and local politicians are pressuring Town of Hempstead Supervisor Don Clavin to share it.

Former President John F. Kennedy famously said, “When written in Chinese, the word ‘crisis’ is composed of two characters. One represents danger and the other represents opportunity.”

All local governments should be inspired by Kennedy’s quote, and act quickly to take the necessary actions to raise revenue and cut expenses without raising taxes, during an opportune time when there will be little constituent pushback.

Here are some initiatives local governments can undertake to raise revenue and cut expenses:

Streamline and Automate the Permitting Process
Building permits are an important source of revenue to local municipalities. New construction projects will create good paying jobs during a time of high unemployment. Going forward, all building permits should be granted through an expedited online process so long and costly delays are a thing of the past.

Businesses will move to Long Island if they know municipal building departments will grant permits quickly. All other local government permits issued by their clerk’s office should also be available strictly online. There are several good online permitting platforms and one of my favorites is Camino: https://www.camino.ai/

Lease out Landfills for Solar
Leasing out capped landfills is an easy way to generate revenue. The Town of Hempstead has an over 100-acre landfill in Oceanside. The Town of North Hempstead has a capped landfill that can be used for solar too. The going rate for leased land for solar is about $10,000 per acre per year.

Create Foreclosure Registries
At any given time, roughly 2 percent of all Long Island homes are in various states of foreclosure. Unfortunately, additional homeowners will have trouble making mortgage payments if the coronavirus pandemic continues to keep Long Island’s businesses closed.

A foreclosure registry charges banks a semi-annual fee to keep data with a municipality current, such as who is servicing the mortgage and who is in charge of maintaining the property.

The Town of Oyster Bay’s foreclosure registry is generating close to $1 million a year, and the Town of Babylon’s about half that. Every local government should create a foreclosure registry. ProChamps is the leading foreclosure registry firm in the industry: https://prochamps.com/HomePage.aspx

Develop Municipal Owned Property
While I was Deputy Chief of Staff of Economic Development at the Town of Hempstead, I put together a database of town-owned lots. There were dozens of properties that were prime candidates for development.

One that stood out, the former East Rockaway Yacht Club, has been vacant since Hurricane Sandy destroyed it. This one-acre lot is worth well over $1 million and could easily be developed to help mitigate the town’s severe affordable housing shortage.

This would generate revenue for the Town, create jobs, and put the property back on the tax rolls.
Nassau County owns a massive inventory of property from unpaid tax liens. These lots could be given to developers for free, under the condition the county would share in the profits when developed. This would create economic activity, increase tax revenue, and rehabilitate a blighted property.

Online Bidding and Electronic Signatures
Online bidding decreases time to award a contract, increases transparency, and brings in competition. It can also save local governments up to 30% off the cost of procurement and cut the time for bidding a contract in half. SpecBid, a Long Island-based online bidding contractor that already works for Nassau County, is worth considering: http://www.specbid.com/government.html.
DocuSign, well known by anyone who’s ever used an electronic signature to consummate a contract, can also save municipalities precious time and money. Long Island’s governments should get rid of their typewriters and move to consummate all contracts electronically: https://www.docusign.com/solutions/industries/government

Vendor Fast Pay
It takes a municipality up to 60 days to pay an invoice. A Vendor Quick Pay company pays a municipality’s invoice within 24 hours for a 3 percent discount.

Local governments would share this new revenue stream on a percentage basis depending on how quickly they paid the Vendor Quick Pay company back. This could save municipalities up to $20,000 of every $1 million in government invoicing.

It’s clear there will be a severe diminishment of revenue and some higher expenses for all local governments for the foreseeable future.

Residents can’t afford a property tax hike and municipalities should try to avoid the short-term quick and expensive fix by bonding budget deficits (look at Long Beach as an example why bonding deficits isn’t advisable).

Long Island needs its elected officials to proactively act, determine their own fate, and not rely on a government bailout. I hope some of the aforementioned ideas motivate our elected officials to take action now.

4 COMMENTS

  1. Concrete and actionable suggestions for creating opportunity where others think there is none. Well written and thoughtful ideas.

    • Thank you Chris. I have about 50 more ideas I can share that any government can implement but change is difficult. There is no better time to make substantive change in government than during a crisis. Elected officials that are early adopters will quickly be emulated by peers.

  2. “Nassau County owns a massive inventory of property from unpaid tax liens. These lots could be given to developers for free, under the condition the county would share in the profits when developed. ”

    No doubt a result of the County’s “enlightened” property tax structure, right, Adam?

    This is pretty rich: drive the property holder into penury, have the County take the property over, then hand it over to developers who control the politicians for FREE, and then make the County a stakeholder in a private enterprise.

    And these are the “progressives.”

    Wonder what the other 50 ideas look like?

  3. Lower business taxes and more business will be attracted to the area. Lower business taxes will also allow for businesses to use those added resources to hire more people. Putting people to work is paramount to a recovery. You can also create a one year tax credit for each added job created helping to stimulate hiring putting people to work.

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