Local Leaders Racing Against the Economic Impact of COVID

July 15, 2020

“I sit alone as many of the 81 city employees furloughed work in City Hall, including the two members of my immediate staff.”

Salvatore Panto Jr., Mayor of Easton, PA 

Like Mayor Panto’s municipality, 74% of municipalities in the United States have already been forced to make unavoidable cuts and adjustments. 

It has been more than six months since the COVID-19 pandemic hit our country. With the economy at risk, the National League of Cities (NLC) reached out to its members with an opportunity to share how the pandemic impacted the fiscal budgets of cities, towns, and villages. 

Many cities, towns, and villages’ fiscal budgets rely on tax revenues. But with closing businesses and social life adjusting to a new reality, local leaders face unprecedented challenges to protect the future of their local economies. 

“Our preliminary budget projections began earlier this month [May]. We expect to have a shortfall within our sales tax which supports 1/3 of our budget.”

Katherine Readings, Councilmember of Burleson, TX. 

Twenty-four percent of cities are making significant cuts to community and economic development programs. With these programs at a halt, unemployment rates are increasing, and cuts in programs such as the Community Development Block Grant (CDBG) are hurting vulnerable people the most. 

The survey reveals that local leaders face a dilemma since they need not only to determine which programs to pause but also to furlough employees in an attempt to balance their budgets, but there is a lack of access to unemployment compensation, which escalates the impact of COVID-19 in their communities.   

According to NLC’s survey, public services such as street lighting, pothole repairs, sewage, trash collection, and parks are also being impacted by fiscal cuts. 

“The City of Excelsior Springs is very reliant upon economic-based taxes, such as sales and franchise taxes. We do not know the extent of the impact because the duration of the concern is unknown. We anticipate losing between $300,000 – $1.2 million in revenues and have removed all discretionary expenses from our budget and reduced all employees’ salaries by 10%.” 

Molly McGovern, City Manager, Excelsior Springs, MO. 

Local leaders fear that these fiscal cuts and the impact of COVID-19 are also threatening to aggravate the disparities of their communities. 

“COVID-19 has devastated our community across the board. It has exacerbated everything: Health disparities, social services, recreation, renters, those who are food-deprived, and those who risk their health going to low paying jobs.” 

Blaine Griffin, City Councilor, Cleveland, OH. 

The CARES Act and the NLC’s Initiative 

While the CARES Act aimed to provide $150 billion relief funding for states, territories, tribes, and local governments, 70% of municipalities have not received the funding. 

As the COVID-19 pandemic continues to affect the US, local leaders are leading with urgency to keep their economies on track. NLC has committed to fight for direct funding for cities, towns, and villages. 

Through the Cities are Essential campaign, NLC has developed resources for local leaders to push for direct federal funding for their communities. 

NLC urges local leaders to keep in close contact with their federal partners such as their congress representatives. 

“Along with my fellow City Council Members, we have been actively engaging with the City’s federal congressional delegation and our advocates in Washington DC to seek prompt action from the federal government to ensure that all affected communities have direct access to emergency funding, including cities that have populations under $5000,000 residents, such as the City of San Leandro. Through my roles with the NLC, I have also been actively writing letters and directly advocating for the needs of my community.”  

Pauline Russo Cutter, Mayor of the City of San Leandro, CA 

Local leaders are actively participating in this initiative because they recognize that there is an uncertain future if they do not receive aid to offset the revenue loss threatening their local economies. 

 

About the Author: 

Maria Elena Silva is a Frank Karel Fellow in the Digital Engagement, Marketing & Communications department at the National League of Cities. She is a rising junior at Hood College, majoring in Economics.