Growing Challenges and Shrinking Budgets
I have spent the last five months speaking with Community and Economic Development, Code Enforcement, and Planning Directors about how COVID-19 has affected their short-term outlook. The pandemic, combined with the various shutdowns, has put huge pressure on many of our city leaders at the same time that their budgets are being slashed.
The National League of Cities reports that sales tax revenues have fallen 11% and income tax revenues have dropped 3%. Coupled with a wave of unanticipated expenditures in response to the public health emergency, the outlook for local governments is bleak. Although property tax collections actually rose in 2020, experts note that the impact on property tax receipts typically lags in an economic downturn. So in states like New York, where property taxes contribute three times as much as sales & gross receipts taxes to local government revenues, according to the Annual Survey of State and Local Government Finances, this means that even as the economy picks up steam, the fiscal pinch is likely to continue.
In response, many local governments are trimming staff. According to the U.S. Bureau of Labor Statistics, there are 13 million fewer people employed in local government (excluding education) in August than a year ago. That’s a 6% decline. For the folks I’m talking with, these are more than statistics—they are colleagues and friends who are furloughed or out of a job.
And yet, in the face of shrinking resources, it’s inspiring to see the tremendous work that municipal leaders are doing to combat the fallout from COVID-19. Many cities have begun to take proactive steps to monitor evictions, foreclosures, business closings, and neighborhood change. They are using data-driven strategies to allocate financial assistance, target resources, engage with the public, and coordinate with the non-profit community. The hundreds of the conversations that I have had with city leaders over the past few months have left me encouraged, knowing that despite the budget shortfalls and unprecedented challenges, our local leaders are attacking the issue head-on to limit the impact on the residents and business.