Apr. 25th, 2020

Guidance for Local Governments During the COVID-19 Crisis

The State of Michigan continues to provide guidance for local governments during the COVID-19 crisis. The State has compiled its current resources on the treasury’s website, found HERE.

In addition, the Michigan Department of Treasury, Michigan Municipal League, Michigan Townships Association, and Michigan Association of Counties hosted a webinar to provide the most recent updates and resources for Local Governments, and a replay of that webinar can be accessed HERE. Slides for the webinar, which include contact information for COVID-19 related questions, can be accessed HERE.

With the uncertainty around revenue streams that local governments receive from the State, local governments are encouraged to review all revenue streams to plan for potential reductions and to begin discussions around controlling costs. Below is a summary of the updates the State provided during the webinar:

  • State Revenue Sharing – At this time, the exact impact on State Revenue Sharing payments is unknown. Constitutional revenue sharing payments are based on Michigan’s sales tax collections, and there are forecasts that spending within April and May could be at 50% of normal volume, which will impact the June revenue sharing payment and the payments following.
  • Act 51 – At this time, the exact impact on Act 51 payments is unknown. With the reduction in traffic volumes, there is an estimate that the State is seeing a 50-60% decline from prior year. The Michigan Department of Treasury will be consulting with MFOT to come up with a new forecast within the next couple weeks.
  • PPT reimbursements – May PPT reimbursements have already been calculated and are not affected by the COVID-19 crisis.

Federal COVID-19 Relief Funds – The State has been allocated $3.1 billion for necessary expenditures incurred because of the public health emergency between March 1, 2020 and December 30, 2020. The State is still waiting on additional guidance on these funds, but at this time the current interpretation is that these funds do not allow for supplementing lost revenue.

State, local, tribal and territorial governments and certain private nonprofits could be eligible applicants for the FEMA Public Assistance Grant Program. A complete description of this program is found HERE.  This is a reimbursement-based program, and requires a 25% local match. Eligible costs include emergency protective measures and response activity, including the reduction of immediate threats, emergency testing facilities, and temporary healthcare facilities. The full extensive list of eligible costs can be found within the program guide. All potential applicants should register with the federal grants portal by April 30, 2020, HERE.

In addition as a result of the COVID-19 crisis, the State has delayed the implementation of the uniform chart of accounts starting with fiscal years ending October 31, 2022.  More details HERE.

An additional webinar is being planned for within the next couple weeks to address additional questions and follow-up.

Special Note Related to GASB:

The Governmental Accounting Standards Board (GASB) has also been providing updates due to concerns with the COVID-19 pandemic. GASB recently voted to issue a proposed standard postpone the effective dates of 9 standards, plus delay the effective dates for 4 implementation guides. Click here to read the exposure draft. Comments on this draft are due April 30, 2020, after which a final decision will be made.

Our Governmental Audit team at Hungerford Nichols CPAs + Advisors will continue to monitor GASB changes and let you know when something has been finalized.