Photo by Kelsey Shoemaker.

Coronavirus

Dallas Won’t Be Able to Aid Small Business Without Help

The city will have to lean on federal and state relief as it contends with its own budget concerns, including shrinking sales tax revenue.

The city’s ad hoc COVID-19 Economic Recovery and Assistance committee met over a conference line this afternoon. There is a lot to digest from a two-hour meeting that might’ve contained as much info as that 10-hour video marathon last week. But worth it to take a dive into the main tension.

On one end you have City Council members advocating for Dallas to play a financial role in assisting small businesses, as some have gone under already and many more likely will. There was talk of pulling cash from city coffers—Council member Chad West suggested something like $7 million to $10 million—and then enlisting a private match. “Because if we’re going to save businesses, this is the time to do that,” he said. “Businesses are closing every day.” He wasn’t alone in his urgency.

On the other you have the reality of the city’s own budget problems, the fact that COVID-19 could easily result in tens of millions of dollars in lost revenue and a substantial boost in expenses, a reality laid out in straightforward fashion by Dallas’ Chief Financial Officer, Elizabeth Reich.

The truth, Reich intimated, is that the depth of Dallas’ issue is yet to be known. We came to the coronavirus crisis already at a $4 million deficit for the year, due to extra police hiring. And now we face the bleak uncertainty of sales tax revenue that, it speaks to reason, is either falling or plummeting. We won’t know which for a couple of months; the city will get April’s figures in June. But a 10 percent reduction for the year, in line with what happened in 2009, would put a $30 million hole in Dallas’ budget.

“This kind of decline is not going to enable us to support anything more,” Reich told the committee. “In fact, we’re going to have to make some very tough choices about how to cut back.”

Reich also mentions that the city is counting on property tax revenue increasing the 3.5 percent allowed by state law. Those appraisals have already been completed, she says. But she also pointed to a 9 percent drop in values over three fiscal years starting in 2010, after the last recession. Finally, there are extra expenses: “for additional sheltering for homeless individuals; clearing of city facilities, vehicles, and equipment; more supplies for city employees; housing cost for first responders while under self quarantine or isolation; and expanded IT capacity for teleworking and virtual meetings.”

All that makes federal relief crucial. And Council members blistered staff about how it will trickle down, much of it centered around the potentially hundreds of millions being tossed around in drafts of this third relief bill.

“The city can’t print money, and we know there’s going to be a hit,” said Council member Paula Blackmon, the committee’s co-chair, in an interview after the meeting. “The question is how do we use the resources that are coming from the state and the feds? And, in the meantime, keep people from being displaced?”

West asked about a provision that, through the Small Business Administration, would reimburse small businesses for as much as 90 percent of their employment costs when all this is over. The Senate version indeed includes $500 million toward these ends, he was told. One way or another, experts expect the SBA to get a big chunk of change from this $2 trillion bill in its final iteration. (Update: the sides struck a deal late Tuesday, including a reported $300 billion for small businesses.)

West and others see the more urgent need because they know it will take at least a month, but possibly two or three, for federal relief funds to funnel into small business accounts. Dallas’ small business environment could look drastically different in a week.

But Council member Lee Kleinman says the city can’t fill this pressing need. Instead, it must focus on funding its most core services: police, fire, water and sewer, sanitation, and basic public works. Kleinman is also working with the Legislature to get the state to allot dollars to cities to help with struggling businesses and workers who are out of jobs. Possibilities include using money from the state’s Rainy Day Fund and possibly allowing a delay on paying the sales tax. Staff spoke pessimistically about both avenues on Tuesday.

“Unfortunately for the folks in economic development, I appreciate very much that you’re looking at creating funds to help small businesses, but in reality I think we’re going to be raiding money from every other department besides those five critical departments,” he said. “If we have programs that are leveraging or sending out federal or state funds, that’s great. But any of our own money, we have to keep for our main basic services.”

After the meeting, in an email, I asked Reich directly whether it was possible for the city to fund small business relief right now. Her response:

We are working through many different scenarios for addressing the challenges resulting from COVID-19.  I am pleased our Federal legislative delegation is advocating for cities and the resources we need.  Those resources will be critical to our ability to provide direct assistance to individuals and businesses in Dallas.  Like many, I await the outcome of discussions in Washington, and will determine our next steps once we know more.

Not only will city staff need to coordinate with other levels of government, it will also have to help coordinate local resources. It rolled out a tool to that end late Tuesday.

Workforce Solutions will work with Dallas County and the Dallas Regional Chamber to put together a resource for connecting folks with non essential jobs to employers hiring for essential ones, referring to the workplaces that the county and city’s shelter-in-place orders allow to operate. In a phone call after the meeting, Council member and committee chair Casey Thomas said the project would be a website, a “mechanism to connect people who are out of work with jobs in these essential industries.”

Whether it has money to contribute or not, the city will play a crucial role. As Council was told on Tuesday: these programs may be federally-funded and state-managed. They will be implemented locally.

A telephonic town hall is scheduled for Thursday, in which the public are invited to share their new realities.

“We’re going to hear what people are really feeling and gauge whether we’re marrying the two,” Blackmon said, referring to the city’s response. “I think we’re going to be pretty close. People are scared. They’re uncertain and they need real relief. So we’ve got to use that money coming from the federal government—and hopefully from the state government—to put it back into our communities.”

Matt Goodman contributed to this report.

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