Cities are Making Unavoidable Cuts in Response to COVID-19 Fiscal Pressures

New survey data from over 1,100 municipalities across the country shows that the national economic recovery is at even greater risk of stalling if Congress fails to provide direct federal aid to America’s cities, towns and villages.

The survey, which focuses on local spending cuts and service adjustments, found that 65% of cities are being forced to delay or completely cancel capital expenditures and infrastructure projects, which will stifle job growth and slow local economic activity and further imperil economic recovery efforts in communities across the nation. These cuts drastically impact not only the people who live and work in these communities, but also the infrastructure and essential services that are critical to the national economic recovery.

Without congressional action now, the forced delay or cancellation of infrastructure projects will create an economic ripple effect throughout the nation not felt in decades.

  • 61% of cities are delaying or canceling equipment purchases, which will stunt local commercial activity among businesses that supply equipment for municipal projects.
  • 24% of cities are making significant cuts to community and economic development programs, which further hinders local businesses from bouncing back from the current recession.
  • 13% are making necessary cuts to code inspection, planning, and permitting, delaying reopening and the growth of local businesses.

The potential devastating economic impact of infrastructure project delays and cancellations comes as 32% of cities indicate they will have to furlough or lay off employees, which will add to the already staggering 1.5 million job losses in the public sector since March. 41% of cities have already or will institute a hiring freeze to respond to these fiscal pressures – making it even harder for these workers to get their jobs back. These growing unemployment numbers will further slow national economic recovery efforts if Congress does not deliver critical aid to ensure municipalities can keep their essential workers on the job.

As many states begin to see a resurgence in coronavirus cases, 70% of cities say one of their most significant unexpected expenditures were on personal protective equipment (PPE) and contracting disinfecting services to keep their communities safe and healthy as public buildings begin to re-open. These unanticipated expenditures will only continue to rise as municipalities work to address new spikes in coronavirus cases in ‘hot spots’ across the nation.

The survey also found that nearly 70% of cities have not received funding through the CARES Act, further underscoring the need for Congress to provide direct aid to localities in regions where coronavirus cases remain high or are increasing on a daily basis.

Additionally, the new survey found several trends that further underscore the urgent need for Congress to provide direct federal funding to municipalities affected by the COVID-19 pandemic:

  • Our previous research has shown that local governments in states across America could experience a revenue loss up 40%.
  • 74% of municipalities in the United States have already started making unavoidable cuts and adjustments in response to the projected $360 billion revenue loss for cities over the next 3 years.
  • 20% said those cuts are happening across the board, 54% said they are more targeted, while other cities, towns and villages say it is simply too soon to know what spending adjustments will be needed.
  • 66% of cities have been forced to cut summer-specific programming, including summer youth jobs and summer camps which primarily affect high-risk youth. Nationwide, over 5 million youth are neither in school nor at work over the summer.
  • 16% of cities have incurred “other” significant unexpected expenses, with many indicating increased costs related to election administration, putting additional strain on the infrastructure of our democracy ahead of the November General Election.

This data includes results from all 50 states, the District of Columbia and Puerto Rico.

Download the One-pager and Infographic of the survey results.