June 17, 2020 · OPINION
Who will pay when bills come due for the pandemic?
By Stephen D. Haner
There may be a second wave of COVID-19 disease coming, but the secondary effects of various pandemic economic decisions may hit us sooner. Rent and utility bills customers can delay paying because of the crisis will eventually come due. But for whom?
The Legal Aid Justice Center looked at U.S. Census survey data that indicated many Virginians have fallen behind on their rent and did not expect to pay their next bill. It predicted an ““eviction catastrophe" as eviction and foreclosure bans end, and lenders and landlords rush into newly reopened courts for judgments.
"The Governor should use emergency powers to immediately enact a moratorium on evictions or should allow localities to enact their own until the General Assembly can address tenants' mounting debt. The General Assembly should create relief for tenants who are significantly behind in rent payments through a waiver or rent cancellation plan," the advocacy group asserted.
Gov. Ralph Northam took up the call, and the Virginia Supreme Court has agreed to hold off eviction proceedings until June 28.
Similar dire predictions swirled around the State Corporation Commission as it considered ending its moratorium on utility disconnections. Since March, Virginia electric, natural gas and water providers — public or private — have been allowing struggling customers to pile up payment balances with no fear of disconnection.
Is the goal that these unpaid rent or utility costs are never due? If so, it is time for advocates to openly call for that and to be equally honest about whom they expect to pick up the tab or take the loss.
Rent may include little or no profit. No moratorium has protected landlords from their own creditors since March. Rent dollars pay the property taxes, insurance, maintenance, utilities and any financing costs of the property.
In turn, those property taxes finance firefighters, schools and local social programs that are likely helping those taking advantage of the moratorium. This is a domino effect that starts with renters and ultimately circles back and will knock them down, too. Put enough pressure on that market and the stock of rental housing could shrink.
The SCC asked for comments on whether to extend the utility disconnection ban past June 15, and signaled concern over the financial impact on the utilities:
“If such bills are never paid, the costs ... are ultimately borne by paying customers as operational costs of the utility. These costs do not disappear; they are shifted to other customers, who themselves may be struggling to make ends meet in the economic catastrophe caused by the COVID-19 pandemic. Non-payment of bills also impacts a utility's liquidity and could even threaten its ability to continue providing service to all of its customers, a factor particularly salient with regard to electric cooperatives, who ... are owned by their own customers,” the commission wrote.
A number of advocacy groups said keep the moratorium in place. The state’s largest utility, Dominion Energy Virginia, filed comments supportive of continuing the moratorium. Beyond promising more corporate dollars for its in-house charity, however, Dominion ignored the issue of cost shifting.
A group of 58 state legislators, from both chambers and parties, filed a letter asking the moratorium to hold until August 31, ominously promising they were considering “novel legislative options that could mitigate the financial hardship faced by our constituents as well as those of Virginia's public service companies.” Just what we need, more revisions to Virginia's constantly changing utility regulation. The SCC accepted that date: Aug. 31.
Other utilities that filed comments asked to end the moratorium. An association for apartment and office building owners also asked the SCC to be sure they were not forced to pay higher utility bills to cover delinquent residential customer accounts. Any such costs should be assessed by customer class. That means the heaviest costs will hit residential customers.
A citizen comment was blunt about where to send the bill: “Why don’t you ask the CEOs . . . who make millions of dollars every year?”
There was no public forum where landlords or lenders could file comments on the proposals to delay the eviction of tenants or foreclosure of borrowers. The assumption that they are the only economic losers from non-payment, of course, is just as ridiculous as expecting utility executives to cover electric bills.
Americans who lost jobs were given $600 per week in supplemental unemployment insurance, enough for most to ensure the lost income was totally replaced. Almost everybody received tax-free stimulus payments of $1,200 each, with additional dollars for children. Giving people in need emergency funds to keep current on their bills makes far more sense than letting them think they will not have to pay.
molly33 · June 24, 2020 at 8:34 am
That's an easy answer - the taxpayer ALWAYS pays…
Mark House · June 20, 2020 at 4:42 pm
AmericanPatriot - Anyone that has ZERO in common with you dodged a bullet.
Not having anything in common with you is something to celebrate.
Let's create a Nothing in Common with Whiners Day.
Now, where's the list of Republicans? Starting with McConnell whose value is over $34 Million even though Kentucky ranks at #41 out of 50 for economy, education, healthcare, and fiscal stability. Rich Mitch has been in office since 1986.
PabloCruz · June 19, 2020 at 9:05 am
“I have ZERO in common with you other than we are on the same planet.“
Congratulations, you just proved my point.
AmericanPatriot · June 19, 2020 at 8:26 am
Linda, here is a thought
Pelosi has been in office since 1978 and is worth over 200 million
Schumer has been in office since 1981 and also is a millionaire.
Jerry Nadler has been in office since 1992
Steny hoyer - 1981
John Lewis - 1987
AmericanPatriot · June 19, 2020 at 8:02 am
I have ZERO in common with you other than we are on the same planet.
Linda Ward · June 18, 2020 at 8:36 pm
Trump is just the symptom not the cause of what is wrong with our society, like a lump where cancer is growing. Best thing that can be done is cut that cancer out and hope that it is gone forever. Yet, you have to be vigil and do everything you can to make sure that it stays gone.
How do we do that? Vote, get rid of lobbyists, have term limits, have accountability and oversight, background checks, tax returns, elect or choose people that have the country's interests in mind, not their own personal agenda or vendettas. Get rid of corporations and wealthy people being able to BUY politicians that will do what they think is best for them. There are way more taxpayers, the 99%, that should be having a say in how this country is ran, not the 1%.
PabloCruz · June 18, 2020 at 8:17 pm
AmericanPatriot-I don’t know you but I’m willing to bet that, like me, you work for a living, because if you were rich, you wouldn’t be posting on here. That means that you and I have more In common, than you and Trump, or me and any other president. The working people of America have been let down by both political parties; for example since the deregulation of the trucking industry, signed by Jimmy Carter, or NAFTA during the Clinton years. Both of these laws drove down wages for working people. Hollywood, media, pro sports, these things have no material effects on your life, or mine. I take your passion for politics at face value, but we’re not enemies. Keep your eye on the big picture. The American democratic system has been hijacked by corporate power through lobbying and other methods, and it’s not working out for those of us who work for a wage. If we stay in our tribes and keep fighting, we lose. Remember who the real enemy is.
AmericanPatriot · June 18, 2020 at 9:39 am
Liberals own every major institution in America. Academia, hollywood, media, sports, government, big tech...
So, if there is institutional racism - whose fault is it? Everywhere we see cities on fire, because of unhappy people, who have elected democrats for decades.
And now its Trump's fault?
These are some diseased brains.
Tony Bentley · June 17, 2020 at 5:41 pm
There is no "trickle down" economics. It's been trickle up, as Pablo Cruz pointed out, for the last 40 years. When times are good the wealthy do great, when times are bad the wealthy are still doing good.
Silii · June 17, 2020 at 4:25 pm
The real question about bail out money is "Why is the Trump administration via Treasury Secretary Mnuchin absolutely refusing to make public recipients of billions in bail out money?" What are they hiding? I think we can all accurately guess the answer. Take billions of tax dollars and secretly hand it out to whom? This administration needs to be totally dismantled in November.
PabloCruz · June 17, 2020 at 3:30 pm
Who will pay when bills come due for the pandemic?
The obvious rhetorical implication in Mr. Haner's question is; we the good, noble, upstanding taxpayers will be stuck footing the bill for all the poor people who can't take care of themselves.
How is it that individuals like Mr. Haner, are always lecturing to people that they have to have at least 3 months of living expenses saved up in case of an emergency, but now this gentleman is crying on behalf of landlords that they won't be able to pay the mortgages and taxes on their buildings? Being a property owner is a business. Don't they have a financial cushion saved up for times like these? Are they not following their own advice?
Since the real estate crash in 2008, as home ownership plunged, there has been a massive investment into rental properties. Many hedge funds and venture capitalists bought up tens of thousands of rental units. The Kushner family alone owns more than 20,000 rental units through its subsidiary, Westminster Management. Their unscrupulous business tactics are well known to tenants and journalists, as are their favorable financing options and massive profits. Is Mr. Haner seriously arguing that somehow the Kushner companies, and those like them, are unable to absorb a small percentage to loan forebearance or forgiveness? Certainly, not all landlords are of this scale and there will need to be some concessions for those smaller operators who are in need. That seems reasonable.
Unfortunaltely, the economic effects of this pandemic may continue to get worse. According to Bloomberg, a second wave of layoffs of as many as 6 million employees, many white collar, may be coming. In economic down-turns, white collar layoffs tend to be preceded by blue collar layoffs.
This means that the effects of this economic downturn will be socioeconomically much broader than originally thought. The implications go much farther than just the rental and utility considerations.
Finally, Mr. Haner states that "Americans who lost jobs were given $600 per week supplemental unemployment insurance, enough for most to ensure the lost income was totally replaced." In fact, millions of Americans have not received the $1,200 stimulus money or the supplemental unemployment insurance due to a multitude of reasons. Administrative back-logs have been high in states such as Florida, preventing filers from receiving benefits. In addition, many Americans don't have checking accounts, and are waiting on paper checks. I believe that most Americans want to pay their bills, and research has shown that most families who have received stimulus funding, pay their bills with the money.
So yes, in answer to Mr. Haner's question. We all will pay in some form or another. But that's the price we have to pay for economic policies that have driven down wages for the last 40 years, and for corrupt executives who in the past, have played "fast and loose" with our economy. It's worth remembering that many in our society live on the margins, even those with "good" incomes. Sometimes it doesn't take much to push us over the edge.
Jerome Fields · June 17, 2020 at 1:24 pm
The going rate for a 2 week stay in ICU is around $800,000. Who is going to pay for that bill when it comes due?
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