April 15, 2020

How the coronavirus crisis could change the relationship between municipalities and states

Raleigh, North Carolina, USA State Capitol Building.-1

Crises change things. They may be the only things that can truly bring about real change, to paraphrase a quote from the famous economist Milton Friedman. For anyone whose business is greatly impacted by local government spending or decision-making, the question of the hour is how will the fallout of the coronavirus crisis change the way city and county governments operate?

In the short-term, we know that local governments will be forced to cut spending. A report by the Brookings Institution breaks down the numbers about the assistance states and local governments can expect from the federal government from the CARES Act and the Medicaid expansion, and the bottom line is, it won’t be nearly enough to prevent states and localities from cutting spending.

But looking beyond the budgets, there are many ways that this crisis will mark a turning point for local governments. It’s helpful to look at these changes through the lens of the relationships that will forever be changed — and one relationship that will be sure to change is the one between state and local government.

We’ll cover the state-local government relationship in this article, and look at the other two in a series of posts.

In the last five or so years, the relationship between states and municipalities has become increasingly contentious, particularly in states where one political party almost unilaterally controls the state government and the other party has more influence in city governments. In a 2018 report about the state of home rule in the U.S., the National League of Cities noted an uptick in preemption laws and general antagonism toward local control by state elected officials. 

“Consistently, state legislators have stricken down laws passed by city leaders in four crucial areas of local governance: economics, social policy, health and safety,” the report notes. 

The impact of those state statutes has come to light in many cities across the country as local leaders have been unable to pass emergency measures that their residents are demanding. In Madison, Wisconsin, the Mayor Satya Rhodes-Conway vented her frustration in a public address where she asked landlords to voluntarily suspend evictions. 

“If I could issue a moratorium on evictions and non-renewals here in the city of Madison, I would,” Rhodes-Conway said. “But I am specifically prevented by state law from doing so, which is an incredibly frustrating thing when you’re trying to take care of your community.”

In light of the way that recent state actions have hampered local governments’ ability to respond to this crisis, organizations like the National League of Cities are calling for a new approach to home rule that would give cities the authority they need to respond to a crisis. 

Spencer Wagner, a Program Specialist with the National League of Cities’ Local Democracy Initiative, shared his insights on how the crisis could impact state and local government relationships with Curate in an email. 

He pointed out that in the absence of adequate local authority, cities must wait for state leaders to pass emergency measures like eviction and foreclosure moratoriums, shelter-in-place orders, and business closures. And while some state governors have been extremely proactive in fighting the spread, such as Ohio and New York, in other states, slow action from the state level is making for a more contentious relationship between city and state leaders. 

When Mississippi Gov. Tate Reeves issued an executive order defining the state’s social distancing guidelines — limiting gatherings to 10 or fewer and leaving most businesses open — he explicitly took away the right of any cities or counties to pass any more restrictive measures. 

In South Carolina, another state that has not issued a statewide order to stay home, the attorney general has threatened to sue cities that pass their own stay-at-home order, claiming that only the governor has that power. 

Additionally, some states have chosen to block Medicaid expansion or add more restrictions to it during the crisis, which will likely expose more people to the virus, and put more of a strain on local health systems and local governments. 

However, Wagner said he is hopeful that the crisis will bring about a more productive local-state relationship in the long-term. 

“We’ve seen plenty of examples of cooperation between municipalities, counties, and their states that highlight the collaborative relationship that should exist between these levels of government as opposed to the preemption we have seen from states in the past,” Wagner said. “I believe this could mark a turning point as we reflect on how cities responded, the collaboration we have witnessed, and the type of authority they needed to enact policies.”

Another factor that will undoubtedly influence the way municipalities and states collaborate is the way the CARES Act funds will be distributed between state and local governments. The act sets a threshold of 500,000 residents as the minimum population needed to receive a direct allocation of funds. In the 16 states with no city or county over 500,000 people, the state government will receive the entire allocation. Small cities across the country will have to rely on state programs to provide any relief for their residents, requiring a good working relationship with state officials.

Wagner noted that catastrophes often prompt reactive legislation to prevent a similar catastrophe from having such a negative impact. For example, in the wake of the coronavirus crisis, many states might be motivated to pass permanent paid sick leave laws. But for Wagner, the biggest takeaway from the coronavirus crisis should be that municipalities need to be able to respond how they see fit. 

“We do not fully anticipate what tools and policies cities, towns and villages will need to implement as we recover from COVID-19, or to respond to whatever the next crisis could be,” Wagner said. “It is essential for local governments to not be hamstrung before it is too late.”

However much the relationships between municipalities and states change, Curate will be here to track it all, and deliver the relevant information to our valued customers. If you want to learn how Curate can help you and your business keep track of legislation at the local level, fill out our Get Started form here.

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