Woodstock and McHenry gained helpful flexibility for how the cities could spend more than $1 million each in federal COVID-19 relief funds in recent weeks, but both municipalities are staying conservative and looking to cut expenses as the pandemic continues, officials said.
While a U.S. Treasury Department decision to let all police salaries from March through December be approved for reimbursement to cities out of the federal coronavirus aid package known as the CARES Act, the extra wiggle room has not greatly changed the overall financial outlooks or strategies of Woodstock and McHenry budget managers, officials said.
For Woodstock, the interpretation of how the city can use the federal dollars means about $1.1 million – the city’s entire allotment of funding from the Coronavirus Relief Fund provided under the law – can be paid back to the city, grants and communications manager Terry Willcockson said.
“We have been assembling receipts and tallying expenses all summer, but thought we would only be able to submit qualified expenses for a small portion of that allocation,” Willcockson said. “This [Treasury decision] means Woodstock will be able to claim the entire allocation using this particular [police salary] expense.”
In McHenry, the amount set to be paid back to the city out of the federal fund is $1.13 million, City Administrator Derik Morefield said.
But measures to trim the budget are still being taken in both cities.
McHenry Police Chief John Birk said he has three vacant officer positions “that I don’t plan on filling anytime soon, even though they are budgeted.”
At the onset of the pandemic in the spring, McHenry immediately moved to freeze, delay or defer about $1.5 million in budgeted expenses, Morefield said.
“We have reduced full-time staffing through retirements either through restructuring or by leaving positions open,” he said. “It is always a balance between being able to provide the level of services expected by residents and the ability to fund the provision of these services. McHenry operates with a very lean staffing model and so reductions to staffing have a direct impact on levels of service.”
For Woodstock, the pandemic will likely cause a drawn-out start to a pilot program aimed at funding building facades improvements and home repairs in a 15-block area on the east side of the city, between Route 47, Madison Street, Church Street and South Street, Willcockson said.
The pilot is set to be federally funded as part of a U.S. Department of Housing and Urban Development’s neighborhood revitalization program to the tune of about $150,000 a year for five years.
The city expected to see the money in October but now the program won’t start until the spring at the earliest because of COVID-19, Willcockson said.
Woodstock also saw overtime paid to city staff from March to September cut by about half as compared with the same six-month period in 2019, according to documents obtained by the Northwest Herald via public records request.
The city paid $191,399 in overtime pay during those six months in 2019 for 3,688 extra hours worked by city staff, the records show, while it paid $88,130 for 1,774.5 extra hours during that timeframe this year.
Birk, the McHenry police chief, offered an explanation for why the city has seen reductions in overtime hours this year: Employees are taking less trips and days away from work during the pandemic.
“Our overtime is way down because we’re not balancing 15 employees that are taking vacation time,” Birk said.
The economic environment still remains too uncertain due to the outbreak for Morefield to predict how long budgetary impacts like keeping city positions open will last.
“To an extent, we still don’t fully know the short and long-term impacts it will have,” he said. “My personal opinion is that there will be a ‘lag’ to some of the impacts, like personal income, so what we can do is be financially nimble.”
A paper published last week by the Brookings Institution, authored by researchers with the Federal Reserve, the University of California-Berkeley and the think tank, made a similar argument that the pandemic’s full economic effects for municipal governments will only be realized down the road.
“At least for 2020, federal aid seems large enough to offset the revenue losses state and local governments are likely to experience,” the authors said. “Looking forward, however, should the economy remain below its pre-COVID baseline for many years, as the Congressional Budget Office projections suggest, these governments will need additional aid in order to avoid cutting back on services or raising taxes and impeding the recovery.”