Who Pays The Unpaid Bills? Watch Out.

By Steve Haner

This was published this morning in The Roanoke Times and then distributed by the Thomas Jefferson Institute for Public Policy.

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.

Governor Ralph Northam took up the call, and the Virginia Supreme Court has agreed to hold off eviction proceedings a few more weeks, 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:  August 31.

Other utilities who 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 makes 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.

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31 responses to “Who Pays The Unpaid Bills? Watch Out.

  1. great work.

    • I linked to the letter from the legislators on the utility bills, and recommend people read it. It is a bipartisan list. Also worth noting that the Senate Democrats were not satisfied with taking a majority on various boards and commissions, and totally purged the R members. One of those was the study commission on electricity regulation. The full court press to make it a means tested income transfer program is on.

  2. Yep. Good article. In the end, some, who can, are going to end up paying for those that can’t. It’s not socialism or communism… it’s the way our system actually works and the issue with Dominion illustrates it.

    On the evictions – I’m seeing some verbiage where some landlords may get some Federal help.

    The perversity of this is:

    1. – all Federal help is debt dollars

    2. – who gets Federal help and who does not – is arbitrary

    3. – winners and losers…yep… and we’re hear from the losers loud
    and clear…

    If businesses – say like Olive Garden – take a hit – are they different from other property owners that rent?

    I don’t know – both have their money invested in what used to be a moneymaking business…

    And now, both are not exactly making money any more but tbey still have their assets – so far – until someone higher up on the food chain calls them in

    The virus is equal opportunity – but the way govt responds is not.

  3. Back due rents and utility bills should not be forgiven. Steve is correct; federal financial help was provided during the pandemic crisis and most folks should have been able to keep current on these bills. At the same time, there should not be mass evictions and disconnections when moratoriums end. Renters and others with past due utility bills should be allowed to work out arrangements with landlords and utility companies to spread those overdue payments over a period of time.

    • Some federal help was provided in the form of a direct payment but it was widely recognized to be inadequate. Unfortunately, there have been extremely long delays in the receipt of unemployment insurance payments. With half of the population unable to sustain an unexpected bill of over $400, most folks were not able to keep current on their bills with no source of income. Hence, things like food and medicine had to come first. Clearly, payment arrangements will need to be worked out.

  4. There may be some cases where the tenant needs to be evicted but I’m not understanding how mass evictions would help the property owners if there are not others waiting to rent.

  5. How about having the General Assembly strip the state income tax exception for any group that engages in advocacy except through unpaid volunteers? Any organization that pays an employee or a third-party (lobbyist, consultant or lawyer) is subject to state income taxes. Then use some of the tax revenue to pay back rent and utilities.

    I suspect many small landlords would be willing to work with good tenants that otherwise paid rent on time, didn’t cause damage and weren’t a source of disturbance complaints to accept partial payment and later full payment in lieu of evictions.

    More reason we need to get more people back to work in businesses that can sell goods and services.

    • I suspect part of what is going on is that some property owners think that some renters actually can pay but are hiding behind the emergency and they’re hoping if they get the power to evict, some of them will come up with the rent.

      It’s along the same lines of those who believe the unemployed won’t come back to work until their unemployment benefits end.

      • Give that man a cigar, he figured it out….There is no question that the $600 bonus on UI means some people would lose money going back to work.

        • I’m sure they can arrange another 3% tax cut for those over $250,000 to make up for it.

        • Could be that the US Govt actually financed these protestors, eh?
          I mean you got your unemployment and not a whole lot to do….

          pretty cynical, eh?

          • Steve Haner

            One recalls Ronald Reagan’s jokes about the quality of cars he saw into coming to Sacramento bringing protesters about his imposition of tuition on U of C students….He said one of their standard excuses to teachers was they left their homework in their other car….

            See Jim’s post about ten days ago about the real face of white privilege.

  6. Well, let’s put it this way, now is a good time to temporarily suspend auto bill-pay and go back to using paper checks.

    Not that I would make an unfounded accusation, but given Dominion’s record, they’re just liable to let you make them an unsecured auto-loan.

  7. People aren’t paying their rent, mortgage or utility bills. Unemployment is astronomical. There’s civil unrest now. How will things look when the unemployment benefits run out and the stimulus checks end? The Fed’s buying corporate bonds and Trump is eyeing a $1T infrastructure stimulus package. It feels to me like the US economy is being levitated by unimaginable levels of foreign borrowing.

    The S&P is down 4% this year despite COVID19, riots, etc. It seemed to me that the markets were overbought coming into 2020. Given all that has happened this year how can the previously sky high markets be almost back to sky high levels?

    Meanwhile, the Chinese are shutting down parts of Beijing because of the spread of an even more infectious strain of the Coronavirus.

    I have an inescapable sense of impending economic doom.

    I hope I’m wrong but I feel like one of the mothers of all economic crashes is waiting around the next corner.

    • And behind Door #3 – deficits as far as the eye can see….
      OR a lot of people out of work for a long long time
      pick your poison

      WSJ:

      Powell Says Economic Gains Are at Risk if Stimulus Measures End Prematurely

      ‘It would be wise to look at ways to continue to support people who are out of work and also smaller businesses,’ Federal Reserve Chairman Jerome Powell said during a second day of testimony on Capitol Hill.

      Federal Reserve Chairman Jerome Powell said recent economic improvement could be jeopardized if Congress curtailed support to workers displaced and businesses shuttered by the coronavirus pandemic.

      Despite a gain in payrolls last month, Mr. Powell said 25 million workers remain dislodged from their jobs. “It would be a concern if Congress were to pull back from the support that it’s providing too quickly,” he said during a virtual hearing before the House Financial Services Committee on Wednesday.

      Congress faces deadlines this summer over how to address expiring provisions of relief measures for businesses and unemployed workers, following nearly $3 trillion in emergency spending earlier this year.

      That spending appears to have boosted hiring and consumer spending in recent weeks, Mr. Powell said.

      The Fed leader has traditionally avoided endorsing specific fiscal policies to stay removed from more partisan debates involving elected officials.

      Mr. Powell framed his recommendations by pointing to significant risks to economic growth that he and his colleagues see this year and next year. Fed officials last week projected that they would keep interest rates near zero at least through 2022 and that the unemployment rate would average around 9% or 10% during the last three months of this year.

    • Then, there’s Bolton.

      • Trump was warned by many about Bolton. But he’s a genius and was sure Bolton would recognize that…..

        • The problem with that theory is assuming Bolton is smart enough to recognize genius.

          Kinda concerned about the boy myself. That down the ramp shuffle and the frozen hand an inch from his lips, I’ve seen it before and I’m pretty sure it’s a dopamine issue.

  8. eh “stable genius”… but Trumps tendency towards to use the military mated to Bolton’s tendency to make war – thank gawd it was NOT a marriage made in heaven.

    The libs will enjoy this for as long as they can milk but it’s likely an obnoxious snore job.

  9. High-income residents account for half the nation’s decline in spending, causing trickle-down effect for workers

    The nation’s top income quartile has been responsible for about half of the country’s decline in spending during the coronavirus-induced economic downturn, according to a research group affiliated with Harvard University.

    Those high-income households directed most of their spending cuts at services that required potentially unsafe human-to-human contact, like food services and transportation, Opportunity Insights found. As a result, small businesses in the most affluent areas lost more than 70 percent of their revenue, compared with a roughly 30 percent loss for small businesses in the least affluent areas.

    This loss of revenue had severe results for workers, the study found. Nearly 70 percent of low-wage workers in the most affluent Zip codes were laid off within two weeks of the coronavirus crisis beginning, while about 30 percent of low-wage workers in the least affluent Zip codes experienced the same. Businesses in the wealthier areas are also posting fewer new jobs as states reopen.

    https://www.washingtonpost.com/nation/2020/06/17/coronavirus-live-updates-us/#link-I7W3S4LWE5HLVKSW3MW2E2WNME

    • Difference between working from home and not working from home. Difference between white collar and blue collar. Affluent zip codes have high work from home percentages. Breakfast, lunch and dinner are made in the house. For everybody. Transportation is a non-issue because nobody is going anywhere. Retail purchases are made online. Less affluent zip codes have a higher percentage of people who work in jobs that require physical presence – health care, landscaping, construction. No more time to buy and cook everything at home than was the case before COVID19. Still need transportation.

      Same reason that minorities are more likely to get COVID19 than whites (or whites and Asians I assume).

      Bigger question is the impact of wealthy people realizing that they can work from home indefinitely. Maybe Boise is better than Baltimore. Maybe Hawaii is better than Henrico.

      The long term question around COVID19 is how much of the tax base now realizes it is mobile. If 10% of the wealthiest White and Asian people in Richmond (less than 5% of the population) decide to leave the city … what happens? I’d guess that would have an outsized impact on taxes and jobs.

  10. Ya know, we didn’t have to have a moratorium on evictions. We didn’t have to rack up these past-due rent and utility bills. We could have just moved those evicted into the quickly emptying nursing homes.

  11. DJ is correct in talking about taxes. If some rural states were smart they would clearly advertise their low tax rates and put money into broadband access to bring in the wealthy. The rich could move in to hobby farm estates while maintaining that high income working from home. This may be politically be very good for the country by spreading wealth and thus influence around watering it down on the coasts… it may just balance things out enough so that they all have to work across the aisles.
    I do imagine a time in the very near future where the rich will live in “neighborhoods” with armed security, private schools, and medical care while most of us will get one big Detroit.

    • Mississippi tried that. I’ll look for something on it. They built a huge intrustrial area complete with roads, power lines, cable, rails, the whole nine yards. It was whe McDonnell was in office that I saw it on TV. The weeds were so high….

  12. Back to Steve’s post and his point about unemployed people getting an extra $600 per week. In Virginia, a lot of those unemployed who have filed for benefits have yet to hear from VEC and get any checks. VEC estimates that about 200,000 (about a quarter) of those filing their initial claims have not yet been processed. So, not only are they not getting the extra $600, they are not getting basic unemployment benefits. This could have a bearing on the unpaid rents and utility bills. https://www.richmond.com/business/many-laid-off-workers-still-not-getting-benefits-virginia-employment-commission-says-it-is-working/article_1ba2e79a-d916-58f7-8b7f-24dff7d79c5a.html

    I do have a question: When a claim that has been delayed is finally approved, does the individual get all the benefits back to the when the claim was filed or do the benefits start from the date the claim is approved? That could have a bearing on being able to pay back rents.

    • Yes, the back amount due is paid eventually and, yes, VEC’s performance has been very disappointing. It has added greatly to fiscal pain. The Gang That Couldn’t Shoot Straight.

    • Okay, this is actually on subject so don’t beat me up.

      My daughter’s employer shutdown on 16 March and sent everyone home. The orders were work on what you can from home and they would pay 100% until April 30. Nice.

      On April 28, my daughter was cut to 50% and was subject to collect UI. She filed the forms online, uploading the email cutting her to 50% and logged off.

      Within 4 hours her claim was approved, and they asked for direct deposit info. That night she was given a date in late May when her first deposit would be received covering back to and including from 29April.

      Off subject…. here down
      Good news, she was recalled starting 29 May. BTW, we retirees are used to being on our own for activity scheduling. My poor girl started going insane in the last week of April. She began weeding and transplanting the backyard of her apartment building, redid all the beds and mowed the place. Extremely happy landlord.

      But I can see from some really painful phone calls, there will be a heavy rush to therapy coming. The uncertainty, and the hours shut away in the house, took a toll.

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