Merced looking at vouchers, loans and other options to help city rebound from coronavirus
While the coronavirus pandemic has restricted business, raised unemployment and wreaked havoc on the economy, the City of Merced is looking toward revitalizing its future with a local COVID-19 recovery program.
Merced City Council on Monday discussed how to put money back into the hands of residents and business owners.
“We as a city should do what we can with the constraints that we have to help both the households in our city, and also the businesses — in particular the small businesses,” said Merced Mayor Mike Murphy at the meeting.
Murphy floated the possibility of a voucher program, which would give each household a voucher to be used at any licensed business within the city’s limits. Businesses could redeem the vouchers with the city for payment.
“The thought is this would help the households, but it would also get money into the hands of our businesses,” Murphy said, noting it would treat each household and business equitably. “Essentially, we wouldn’t be in a position of having to pick winners or losers.”
The vouchers would only be good for a limited time, perhaps three to four weeks, Murphy told the Sun-Star. That way, unused vouchers would incur no cost upon the city.
The vouchers would likely be in the $25-50 range depending on the availability of funds, Murphy said. If the amount reaches $50, it would be in the form of five $10 vouchers, allowing spending to be spread out at multiple businesses, he said.
One possible funding source is the city’s economic opportunity fund, which has few parameters for money to be spent. The city has set money aside there for years and built up about $1 million, Murphy said. He suggested that about half could be used toward the voucher program.
“This is the time to make those investments . . . our businesses need our help,” Murphy said.
Other funding could come from federal Community Development Block Grants, although more work is needed to ensure the voucher program would qualify for this type of grant, Murphy said.
Plus, the city is doing outreach to other possible donors, like those in the private sector and philanthropists willing to match city contributions, Murphy said.
Other suggestions, concerns expressed
Some councilmembers expressed concerns over Murphy’s suggested voucher program.
“I think its well intended, the idea the mayor floated out, but I think there’s a lot of question marks that come back to bite us in the end,” Councilmember Anthony Martinez said.
Martinez noted that $50 for each Merced household is a significant amount of money. According to U.S. Census Bureau data, the city had 25,827 households in 2018.
Martinez and Councilmember Matthew Serratto said the vouchers could lead residents to only a select few businesses, such as grocery stores, leaving little benefit to other small Merced businesses.
It also leaves out businesses that make money by supplying goods and services to other businesses rather than selling directly to residents, Martinez said.
Martinez instead suggested a business loan with 0% interest. A couple hundred thousand dollars could guarantee thousands of dollars to dozens of small businesses, he said.
With this approach, the city would know how much money its getting back and could use it for future loans as the money is returned, he said. Serratto voiced his support for the idea.
Serratto also discussed direct aid to residents instead of deferment. The city is not turning off utilities due to delinquent payment or charging late fees during the pandemic. Serratto said forgiving or paying utility bills, or other costs, is a possibility.
Councilmember Delray Shelton acknowledged that vouchers may be used at the same businesses, but noted residents should be able to do what they want with the vouchers. If spending it all at a grocery store allows a family to eat dinner for several nights, that is their prerogative, he said.
Shelton also said a loan would hang debt over business owners’ heads. “That plague of having to pay someone back is still there,” he said.
A no-strings-attached option, or allowing businesses to pay off the loan over a long period of time, would be better, Shelton said.
Murphy said a loan would only serve the needs of businesses and gloss over households. The voucher addresses both, he said.
Councilmember Fernando Echevarria voiced support for the voucher, but said the critical issue for District 2 residents is the inability to pay rent. A plan is needed to avoid increasing homeless populations, he said.
“The destruction that is happening slowly . . . in District 2 is going to be irreversible,” he said. “There are people that are going to be hurting very badly, so we have to have a plan.”
An item on the May 4 Merced City Council agenda will include the possibility of a local eviction moratorium, which would strengthen the state-wide order by Gov. Gavin Newsom.
A small group will convene before the next council meeting to discuss the logistics of recovery program suggestions and address the questions posed.
The group consists of Murphy, Martinez and Councilmember Jill McLeod, as well as members of the Merced business community, the Greater Merced Chamber of Commerce, the Hispanic Chamber of Commerce and a philanthropist.
Murphy said that while it may be possible to implement several of the suggestions, the city must be mindful of the financial impact.
The small group’s findings will come before the City Council at the next meeting, either as an informational item or for the council to decide action upon. Murphy said a plan must be voted on in a timely manner to have the appropriate impact.
“There’s no easy answers here . . . but we’re going to get through this together,” he said.
