On March 27, Congress delivered a first solution, passing its mammoth $2 trillion stimulus package. The bill includes $150 billion for state, county, and municipal governments with populations greater than 500,000 to help with expenses that spring from the crisis. It also earmarks $100 billion for local hospitals and allows the U.S. Treasury to authorize $500 billion in loans and municipal-bond purchases.
Read: What will happen when red states need help?
The stimulus is historic, but it may not be enough.
“What I would really want to be careful not to do is to paint a picture where there are undifferentiated problems across the market,” Bergstresser said on Friday, not long after the stimulus passed. The crisis could hit cities in the long term like it’s hitting people in the short term. An affluent community with enough cash on hand to withstand a short-term disruption may well be fine, but those that were already struggling may not.
Rural communities could particularly suffer, David Strungis, a senior analyst at Moody’s Investors Service, told me. Many cities and local governments run hospitals and nursing homes, which are being hit particularly hard by the virus—129 COVID-19 cases were linked to a single nursing home in Washington. And a mix of patient surges, revenue declines from canceled elective procedures, and unbudgeted staffing costs from doctors and nurses could further stress rural areas where many residents are more than 35 miles from the next nearest hospital.
In Pickens County, Alabama, for example, residents now have to travel 30 miles—about 45 minutes—for medical care. On March 6, the county closed Pickens County Medical Center, a 56-bed facility in Carrollton, because declining in-patient services made it financially unsustainable. Three weeks later, on March 25, the county reported its first confirmed case of COVID-19. Seventy-five percent of the state’s hospitals operate in the red, according to the Alabama Health Association.
There could be outliers, too, such as cities that thought they were in sound financial shape until they were stretched too thin. Harris County, Texas, expects to spend roughly $11 million more each month the crisis continues—and that’s not including additional overtime pay for police officers or lost tax revenue. “Even our jurisdictions with the most robust reserves were not planning for this,” Matt Chase, the executive director for the National Association of Counties, told me ahead of the stimulus passage. “They were planning for a slowdown in the economy and some dips, but I don’t think they were looking at a global economic shock.”
The stimulus was the best-case scenario, the “shot of adrenaline” that reinvigorated the bond market and provided aid to flailing cities and counties, Emily Brock of the Government Finance Officers Association told me. But for the cities that are struggling to contain the crisis, a shot might not be enough. I asked Brock whether the stabilization package was a Band-Aid or an inoculation.