Municipalities throughout New York state (and, indeed, much of the country) are facing unprecedented demands to provide vital public services under extraordinary conditions and amidst daunting financial challenges. Layoffs of public servants, reductions and/or eliminations of all but essential services and increases in taxes, fees and charges are, in one form or another, being undertaken or contemplated by New York’s counties, cities, towns and villages, regardless of size, threatening to further burden already financially-stressed families and businesses. Leaders throughout the state including Executive Director Stephen J. Acquario of the New York State Association of Counties and Executive Director Peter A. Baynes of the New York State Conference of Mayors, have called upon the federal government to assume a greater role in providing critical financial assistance to struggling municipalities.

Some lawmakers in Washington have indicated a willingness to meet the calls for greater federal action to provide financial relief, including a recent bipartisan proposal led by members from New York’s delegation: U.S. Senators Charles E. Schumer and Kirsten Gillibrand, and U.S. Congressmen Antonio Delgado and Lee Zeldin. The Direct Support for Communities Act (the “DSCA”) would, if passed into law, provide local governments with direct federal relief that can be used to pay for essential services and offset lost revenues and increased costs from the COVID-19 emergency. It would complement hoped-for relief that states such as New York also require in this crisis,

Under the DSCA, the local relief fund would be split equally, with one-half committed to cities, towns and villages, and the remaining half allocated to counties. Of the portion earmarked for cities, towns, and villages, 70 percent would go to Community Development Block Grant (“CDBG”) entitlement communities using the CDBG formula through the Department of Housing and Urban Development to allocate the funding. The remaining 30 percent for cities, towns, and villages would be sent to states, which would be required to then allocate the entire amount within 30 days to all non-entitlement communities in that state based on population.

The portion of emergency fiscal assistance for counties under the DSCA would be allocated across all counties based on population. The exception to that formula is that a current CDBG entitlement county would receive its entitlement amount if it is higher than what that county would receive under an allocation based on population.

Local governments would be able to use DSCA funds to address costs associated with lost revenues and response to the COVID-19 pandemic in an effort to help avoid cuts to essential services and increases in local taxes and fees. The DCA is intended to be part of a larger legislative package that would include, among other things, financial assistance to state, local, and tribal governments; retroactive availability to use the Coronavirus Relief Fund in the CARES Act for lost revenues; and other matters.