Seven hundred cities cut spending to fill budgetary gaps caused by coronavirus shutdowns; but rather than cut areas of excess, many plan to delay or flat out cut plans for road repairs and critical infrastructure improvements, equipment maintenance and purchases, and improvements to water systems.
The cuts have extended to public employees, too.
Fifty-seven thousand public employees were let go in May, according to a Labor Department report released this month, bringing the total number of public sector job cuts since the start of the pandemic to 1.5 million.
Sixty-nine percent of municipalities claim they haven’t received any aid from the federal stimulus program and are calling for $500 billion in aid from the federal government to offset decreases in tax revenue.
The pandemic-induced revenue reductions undoubtedly worsened municipal finances, but it didn’t create them. Cities have deferred payments, sold assets, and counted bond proceeds as revenue to cover budget gaps for years. In fact, in April, Houston’s Controller Chris Brown noted that if the city had actually balanced its budget for the past four years, they’d have $500 million in reserves rather than the $169 million deficit they were facing at the time.
The bottom line is: the federal government shouldn’t reward local governments’ bad budgetary behavior by bailing them out. The pandemic only highlighted this problem—it didn’t create it.
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