Five Facts About the Pandemic’s Impact On State & Local Services, Budgets

Coronavirus has dealt a huge budgetary blow to states, counties and cities. Many are struggling to provide vital services even as their tax revenues shrink because of the pandemic-spurred economic collapse.

  1. States and municipalities desperately seek ways to plug budget gaps.

With tax revenue plunging and unemployment benefits soaring, state government budget shortfalls are expected to exceed $650 billion over the next three years, says a report by the Center on Budget and Policy Priorities. The National League of Cities projects that 300,000 to a million public-sector workers could soon be without pay. “The steep reductions in staffing levels could affect education, sanitation, safety and health, local leaders warn, potentially leaving critical public services in utter disarray,” a Washington Post report found.

  1. Public-sector workers face layoffs throughout the nation.

Public librarians in Santa Barbara, CA, are furloughed; Baltimore is negotiating layoffs with its police union; Houston is deferring its five police cadet classes. A quarter of the city workforce in Dayton, OH, is furloughed. Local officials in Ohio, home to four of the nation’s five most income-tax dependent large cities, face huge pressure to dismiss firefighters, police officers and other essential workers, the Columbus Dispatch reports.

  1. Thousands of public school teaching jobs are at risk, advocacy group says.

Unless the federal government provides massive aid to public schools, hundreds of thousands of teachers will lose their jobs, triggering an “educational catastrophe,” says an organization that represents large urban districts. The Council of the Great City Schools and other groups are urging Congress to provide at least $175 billion in new aid for schools.

  1. Governors also are asking Congress for aid.

The National Governors Association says ramped-up state public  health spending has resulted in “catastrophic damage to state economies.” “The recently passed federal CARES Act contained zero funding to offset these drastic state revenue shortfalls,” the NGA said. “Congress must provide immediate fiscal assistance directly to all states.”

  1. New spending bills will confront a partisan congressional climate.

While the first four pandemic-related spending bills won bipartisan support in Congress, future proposals may face a tougher climate. Republicans and Democrats have recently clashed over the question of protecting businesses from legal liability if they reopen while the pandemic remains potent.


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