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"Completely shortchanged": Cash-strapped cities left out of coronavirus aid push for relief

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Washington — When Congress passed its $2 trillion economic relief package in response to the coronavirus epidemic battering the country, lawmakers provided relief to Americans, small businesses struggling under the economic pain of the crisis and state and local governments on the frontlines of combatting the virus. 

But mayors in small and medium-sized communities from coast to coast are sounding the alarm after they were left out of the package, despite facing the same cash crunch as their larger neighbors. Only localities with populations of 500,000 were eligible for direct aid under the law, known as the CARES Act.

Those cities and towns were "completely shortchanged," said Bryan Barnett, mayor of Rochester Hills, Michigan, and president of the U.S. Conference of Mayors, which has been pushing Congress to ensure localities receive a share of federal aid in the next package.

"The frustrating part of that is we certainly know that America's larger cities need help and need support as well," he said. "But coronavirus is not a big-city problem. It's an every city problem."

Barnett, a Republican, said his city, with a population of just under 75,000, faces the same fiscal issues as Detroit, which has a population of more than 600,000 and qualifies for the emergency aid.

"Every community is having massive budget holes, even those that are well prepared," Barnett said. "The stress is on the local communities in this locally executed, federally supported program without the federal support. When someone has a COVID-19 emergency, they call the Rochester Hills Fire Department, who takes them in a Rochester Hills ambulance on Rochester Hills roads to a Rochester Hills hospital. There's no federal support on that entire trail."

Rochester Hills was forced to furlough some employees, while others are working reduced hours. The city has also canceled capital projects. While the city would typically bring in $200,000 in a single month from a soccer league, that revenue stream ran dry as sports leagues canceled events. 

And it's not just smaller cities forced to grapple with the cash crunch with no federal support.

In Pittsburgh, population 301,000, Mayor Bill Peduto is projecting a deficit of $125 million, primarily because of a steep drop in projected revenues and costs associated with responding to the coronavirus pandemic. The city has suspended parking meter enforcement and is losing revenue from amusement taxes collected through sporting events from its professional teams, the Pirates, Penguins and Steelers.

"In many cases, the revenue sources that we rely upon to pay our daily bills have completely ended," Peduto, a Democrat, said. "It's the way we have structured local government, and it has not been made in a way that is resilient to a shock such as this pandemic."

The city implemented a hiring freeze and across-the-board, nonpersonnel department cuts of 10%, he said. Pittsburgh has also cut spending and refinanced callable bonds.

"Even with all of that, cities will not be able to financially make ends meet over the course of the next three years," Peduto said. "There will need to be assistance coming from the federal government. Relying upon state governments that will be facing the same situation is not a legitimate way to deal with this situation."

Tampa, Florida, has taken a hit in revenues because of its heavy reliance on the tourism industry and conventions, which have all been canceled as officials in many states banned large-scale gatherings as part of stay-at-home orders to mitigate the spread of the coronavirus.

The city is not facing a budget shortfall, Mayor Jane Castor said, and she is not anticipating furloughs or layoffs of city workers. Instead, Castor and her staff deferred projects to the next budget year to cut costs.

"We have sliced and diced," she told CBS News.

The $2 trillion CARES Act signed into law in March guarantees at least $1.25 billion for each state, and localities with populations of at least 500,000 are also eligible for direct aid.

But 16 states don't have any localities that meet the population threshold, according to the Center on Budget and Policy Priorities. Just 36 U.S. cities meet the 500,000-population threshold, according to the Department of Treasury.

While the thought may be that the money given directly to the state or eligible counties would trickle down to localities not eligible for direct relief, Castor, a Democrat, said that shouldn't be left to assumption.

Tampa, for example, has a good relationship with Hillsborough County, which has a population of nearly 1.5 million, but the mayor said that may not be the case elsewhere.

"The states have been taken care of, the counties have been taken care of, the airports have been taken care of, the ports have been taken care of," she said. "The cities are on the bottom of the list and in most instances around the nation, cities are the most densely populated and very active players in economic health, and there should be some consideration given."

The financial woes many states and cities are facing has kicked off a furious battle between Democratic elected officials and Republicans on Capitol Hill, who say they don't believe taxpayer dollars should be used to bail out states that have mismanaged their budgets and budget funds.

But House Democratic leaders have said aid to state, local and tribal governments that have seen their revenues devastated by the coronavirus will be the focus of the next legislative package, though it's unclear when the measure will be ready for a vote.

Colorado Congressman Joe Neguse, a Democrat, introduced legislation with bipartisan support to provide $250 billion for local stabilization funds. Neguse also led a letter with more than 100 of his House colleagues urging Speaker Nancy Pelosi to ensure localities are eligible for aid in the next relief bill.

"We must meet this moment," he said in a statement to CBS News. "We must ensure that every city and county in America has the resources they need to survive and prosper through this crisis, to pay their first responders, firefighters and emergency personnel and to combat the spread of this virus."

Florida Congressman Vern Buchanan, a Republican, is also urging House and Senate leadership to expand eligibility for federal relief to local governments with fewer than 500,000 people, saying the threshold is "arbitrary."

Buchanan's district includes Manatee and Sarasota Counties, which have 403,000 and 430,000 residents respectively. Yet Manatee County has the fourth highest number of deaths in the state, according to the Florida Department of Health. Of Florida counties with the highest number of cases, Manatee County ranks ninth.

A House Democratic aide said $250 billion for counties and $125 billion for cities is expected to be included in the next relief bill, with no population limit. The bill is also expected to include $500 billion for states.

Lawmakers have emphasized the need to get money in the hands of those who need it — states, individuals and small businesses — as quickly as possible, and mayors are urging Congress to use existing funding mechanisms to distribute money, such as the Department of Housing and Urban Development's Community Development Block Grants formula.

"We have to make this investment now in order to be able to see cities return as the economic engine of our nation," Peduto said. "It is for the sake of this nation and our nation's economy that we must be able to sustain the regions that supply the revenue to fund our federal government. If we allow them to wither on the vine, there won't be a recovery in this nation."

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