FAYETTEVILLE, Ark. (KNWA/KFTA) — As people begin to see extra money in their bank accounts thanks t the federal government’s $2.2 trillion stimulus package, economy experts noted something else needs to be addressed, too. City services could start to decline if municipalities don’t get funding.
“Trash and recycling have their own fees associated with them, but police, fire, all [city services] are largely funded through sales tax,” said Mervin Jebaraj, a University of Arkansas economist.
Jebaraj and a team of UA researchers ran a study that deduced the major Northwest Arkansas cities could lose $200 million in the 2020 fiscal year. If cities don’t get aid, their services could take a hit.
“The largest portion of every city’s budget really comes from sales taxes,” Jebaraj said. “Those are most susceptible to downturns and very susceptible to closures like this.”
Springdale Mayor Doug Sprouse said government aid would be nice, but he’s skeptical.
“I don’t think there’s any way the government could afford to do that,” Sprouse said. “We’re all taking a hit. I think some cities are taking even more of a hit.”
Bruno Showers is the senior policy analyst for Arkansas Advocates for Children and Families. He also questions the federal government’s focus on helping counties and cities.
“I know there is some kind of push for smaller-sized cities and counties to get funding in the next round, in the next stimulus package,” Showers said. “I don’t know how likely that is.”
Instead, Showers said these local governments should look to the state for assistance, particularly since Arkansas was given $1.25 billion not too long ago.
“I think some of that should go to cities, and I think city leaders should probably be asking for it,” Showers said.
The federal government did the right thing during the Great Recession, Jebaraj said, adding provisions for local governments.
“The federal government is pretty much the only entity that can send money to states and local governments to fix those budget gaps temporarily so that cities’ and states’ governments don’t have to cut services and cut staff, which then just prolongs this recession,” Jebaraj said.