COVID-19

City finances are in trouble. Next year could be worse.

Justin Ho Aug 13, 2020
Heard on: Marketplace
HTML EMBED:
COPY
The nearly empty streets of New York City in May. City budgets, which fund local infrastructure and services, have been slammed during the pandemic. Cindy Ord/Getty Images
COVID-19

City finances are in trouble. Next year could be worse.

Justin Ho Aug 13, 2020
The nearly empty streets of New York City in May. City budgets, which fund local infrastructure and services, have been slammed during the pandemic. Cindy Ord/Getty Images
HTML EMBED:
COPY

We got a new report Thursday from the National League of Cities, looking at the financial situation of American cities. Suffice to say, things aren’t great — on average, all major sources of tax revenue are down. And 90% of cities surveyed say next year’s financial situation is looking even worse.

The kind of services that cities fund are services people deal with every day.

“Police, fire, garbage, road paving, water and sewer,” said John Cranley, the mayor of Cincinnati.

His city relies heavily on income tax revenue, which has fallen with unemployment spiking. Cranley said the city’s had to borrow more to avoid layoffs in those services. It’s taking other measures, too.

“We’re not replacing retirees to avoid layoffs,” Cranley said. “And just over time, that diminishes the quality and the quantity of the service.”

Cities also rely on sales tax revenue, and consumers have been spending less.

Christiana McFarland, with the National League of Cities, is the report’s co-author. She said property tax revenue is likely to drop, too. But that drop-off likely won’t be felt until next year. As a result, cities are anticipating more cuts.

“Particularly when it comes to their municipal workforce, additional services, pulling back on capital and infrastructure projects,” McFarland said. “And these are all things that have broader effects on the national economy and the economic recovery.”

And when big projects are cut back or delayed, it means people won’t have services or infrastructure they need over a longer stretch of time, said Tracy Gordon, senior fellow at the Urban-Brookings Tax Policy Center.

“It makes perfect sense to not build a new bridge in the middle of a recession, like to hold back on that,” Gordon said. “But if you hold back on that year after year, then you don’t have that bridge.”

That affects a lot of people. A report last year from the University of Michigan found that 84% of the U.S. population lives in urban areas.

COVID-19 Economy FAQs

What’s going on with extra COVID-19 unemployment benefits?

It’s been weeks since President Donald Trump signed an executive memorandum that was supposed to get the federal government back into the business of topping up unemployment benefits, to $400 a week. Few states, however, are currently paying even part of the benefit that the president promised. And, it looks like, in most states, the maximum additional benefit unemployment recipients will be able to get is $300.

What’s the latest on evictions?

For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.

Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?

Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.

You can find answers to more questions on unemployment benefits and COVID-19 here.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.