I know that the last couple of months have been hard and that communities have suffered tremendously because of COVID-19. The consequences will be with us for some time. One of these consequences is the financial stress that will be felt by states, cities and counties. Budgets will be stressed like never before.
Budgets matter. They are moral documents that outline our priorities. How you cut budgets in tough times matters too.
When I became mayor of New Orleans after Hurricane Katrina and the BP oil spill, we faced a nearly $100 million mid-year deficit, which at the time was about 20% of our operating budget. So, right now, I can commiserate with my fellow mayors of cities and towns of all sizes. All across the South, state and local governments are not only grappling with real public health and safety decisions relating to COVID-19, but budgetary ones as well.
With less flexibility to respond to the economic downturn compared to the federal government, declines in state and local tax revenues will be met with layoffs, furloughs, program and service cuts, delayed infrastructure projects, and possible tax and fee increases.
A recent survey of leaders from 2,400 cities for the U.S. Conference of Mayors and National League of Cities noted that nearly 9 in 10 cities expect budget shortfalls due to the economic impact of the COVID-19 pandemic. Many will result in major cuts and layoff.
Unfortunately, the first set of coronavirus response packages limited direct funding support for less than 1% of all cities–just the 36 cities over 500,000 in population. This means cities and towns across the South will be left hanging and the impact in localities will not be felt equally.
What happens when cities and counties face budget cuts? What services get cut first? Who gets left behind? The answer is usually the very people who rely most on the government for support. In this case, those are the elderly who have taken the brunt of the virus as well as the very frontline workers in hourly jobs in the healthcare, service and hospitality sectors. But it doesn’t have to be this way.
First, local governments must be treated as partners in delivering services and policy, not as special interest groups. Local governments are on the front lines of the COVID-19 crisis. That’s why the federal government must step up to not only cover coronavirus response expenses for all cities, it needs to help support the lost revenue from less economic activity as well.
Second, cities and local leaders have to take a measured, strategic approach to downsizing. Across-the-board approaches don’t work. They may be “equal” but they are not equitable. Different services and departments have different end users. And so, we need an equitable lens and approach. Use a scalpel not a hatchet. Trim what can grow back on its own when the economy gets going again. Maintain core services that are used most by the people being disproportionately impacted by COVID-19.
All of this is easier said than done. At the end of the day, we will all have better decisions to make if Congress does its job. Fund local governments directly and quickly to keep our cities working.
We, at E Pluribus Unum, will have plenty more to say on this topic in the coming weeks.
For more on the tough choices city leaders are making to their budget plans due to COVID-19, see our new policy blog post. And, with what would have been Tax Day, last week we published a policy blog post on the importance for COVID-19 economic stimulus payments to reach the most in-need low-income Americans.
Let’s embrace this opportunity to work together, while socially distanced, toward a common goal of keeping everyone safe and healthy and restoring a sense of normalcy.
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Until then, stay safe and stay connected with us at unumfund.org.
Founder and President