All Things Political: Municipalities should prepare for the imminent Coronavirus Recession

Adam Haber

The public’s fear of the rapid expansion of the Coronavirus across the United States, exacerbated by the media, has created tumultuous financial markets. As the economy edges closer to a recession, Long Island’s local governments have a once in a generation opportunity to make swift financial decisions to mitigate future diminished tax revenue. Here are some immediate actions that can be taken:

Refinance Debt – The interest rate on the ten-year bond is at historic lows, with interest rates rapidly closing in on 0 percent (that’s not a typo!). Yet, I recently spoke with a NY based bond advisor who reported a plethora of local governments have refused to respond to calls to refinance their debt. Every municipality, including school districts, should immediately reach out to their bond advisors to learn if their outstanding debt is a candidate for refinancing.

Community Choice Aggregation – The recent slowing of the economy from the fallout of the Coronavirus, has caused energy prices to plummet to close to 20-year lows, which includes the price of Natural Gas. A CCA is a program that should be initiated by all local governments to lock in Natural Gas pricing for residents and small businesses for the next 12-24 months. At current low prices, a CCA could enable the average homeowner to save $150 a year (or more) off last year’s National Grid bills. Here is a link to the CCA proposal I worked on while at the Town of Hempstead. Hopefully, all Long Island towns will quickly follow suit. https://hempsteadny.gov/community-choice-aggregation.

Foreclosure Registry – Unfortunately, businesses are going to get hurt from the financial free fall; and, in the short-term, personal income for some residents could be lost. Because of the sudden drop in commerce, there may be a spike of homes going into foreclosure. Local governments should quickly set up foreclosure registries to help monitor homeowners who are in financial duress and be proactive in providing services to help. For example, the Town of Hempstead could generate roughly three million dollars a year in new revenue and create valuable data to help residents if they set up a foreclosure registry.

Energy Performance Contracts (EPC) – Energy performance contracts, that include changing light fixtures to L.E.D, updating HVAC, and rooftop solar, save more money and/or generate more revenue as interest rates decline through cheaper financing. An EPC would also cut a municipality’s carbon footprint. It is good, cost-efficient government to go green at the current extraordinarily low-interest rates.

Many countries are in the thrall of this pandemic, and Americans are rightfully concerned about getting sick. Making things worse, the economic reaction to the Coronavirus is having a swift depressing effect on the economy. Local governments would be wise to act proactively to protect their budgets from future drops in revenue and to save taxpayers money.

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