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.
Please stay connected with us online by visiting our Twitter, Facebook and Instagram pages.
Until then, stay safe and stay connected with us at unumfund.org.
Founder and President
HEARD AROUND THE SOUTH
News and stories about how southern communities are reacting to COVID-19
Alabama: Hoover officials presented control measures to cut $11.2 million from budgeted expenses to address a projected $11.5 million shortfall.
Arkansas: Arkansas is facing a $205 million budget shortfall, and lawmakers authorized a 5% cut to most state programs.
Florida: Monroe County Commissioners voted to furlough employees to make up for revenue losses in the tourism-dependent Florida Keys due to the COVID-19 pandemic.
Georgia: A new analysis by Georgia State University shows a potential $1.27 billion loss in sales tax revenue, which may limit or defer infrastructure projects.
Kentucky: Louisville furloughs 380 city employees but will continue to provide them benefits.
Louisiana: New Orleans Mayor LaToya Cantrell announced that the city is facing a $150 million deficit due to the coronavirus and warned that the Sewerage and Water Board could be unable to pay its bills.
Mississippi: The state department of transportation is bracing for a decline in revenueslinked to COVID-19.
North Carolina: Local governments across North Carolina are struggling with their budgets due to the pandemic.
South Carolina: The City of Beaufort has instituted a hiring freeze, cut back operating coasts, put capital projects on hold, and stopped overnight travel and training to help close a $2.1 million revenue shortfall due to COVID-19.
Tennessee: Without financial assistance from the federal government, Nashville Mayor John Cooper anticipates a property tax increase of as much as 20 percent.
Texas: Travis County commissioners approved a hiring freeze in response to projections that the county could lose up to $32 million in expected revenue during the present fiscal year.
Virginia: Mayor Stoney unveiled a revised plan for next year’s budget that cuts pay raises for city employees and plans for new jobs due to a projected $38.5 million decrease in revenue.
West Virginia: State Revenue Secretary Dave Hardy says the state could run a $500 million budget gap by the end of this fiscal year.
Recent News & Commentary
Washington Post: Cities, counties fear losing out on US virus rescue funding
The National League of Cities and the U.S. Conference of Mayors released a survey of local officials that found 88% of them “anticipate the pandemic will lead to painful reductions in revenue this year”.
Vox: States and cities are “falling off a cliff” as the economic crisis sets in
The next economic crisis is the one that will hit states, cities and towns. Governors and state lawmakers are going to have to make big cuts fast, unless the federal government does more to step in.
City Lab: Hit Hard by Covid-19, Transit Workers Call for Shutdowns
Bus drivers and subway workers are dying from coronavirus at an alarming rate, and transit union leaders are calling for aggressive action to make them safer.
City Lab: The Power of Parks in a Pandemic
For city residents, equitable access to local green space is more than a coronavirus-era amenity. It’s critical for physical, emotional, and mental health.
City Lab: City Budgets Can’t Survive This On Their Own
Most American citizens largely rely on their local government to protect them, support them, transport them if they get ill, and provide basic, life-sustaining services. We simply cannot afford for our first line of government to fail or go broke.
America’s Food Fund
The COVID-19 crisis has left millions unsure where their next meal will come from. The Emerson Collective, Leonardo DiCaprio and Apple launched America’s Food Fund, a new initiative directly supporting Feeding America and World Central Kitchen. Click to donate.
COVID-19: Local Action Tracker
The National League of Cities and Bloomberg Philanthropies have teamed up to collect and share actions taken by local leaders in response to the COVID-19 pandemic.
COVID-19: What Mayors Need to Know
The United States Conference of Mayors hopes information on this page below serves as a resource for you, city staff, and agency leadership as you continue to keep your residents and businesses best informed and prepared related to this evolving threat.
Mayors’ Questions Answered by Experts from Harvard and Johns Hopkins Universities
The Bloomberg Harvard City Leadership Initiative is collaborating with Bloomberg Philanthropies’ Coronavirus Local Response Initiative to support mayors as they manage COVID-19.