The coronavirus lockdown in the U.S. is going to cost cities an astounding $360 billion in revenue through 2022, according to estimates from the National League of Cities.
Pennsylvania is going to be hit the hardest, according to Bloomberg. The state is at risk of losing 40% of its total revenue this year. Not far behind are Kentucky, Hawaii, Michigan and Nevada. The projections take into account the expected rise in unemployment and assume that every 1% of unemployment will cause tax revenues to drop about 3%.
The analysis was performed by looking at how unemployment would affect specific state and city revenue streams. It combined those changes with each respective state or city’s tax structure to estimate the impact.
Bloomberg’s piece says that the states need help “from the Federal Government” to avoid drastic budget cuts, but the truth of the matter is that they need help from the Fed. The Federal Government, nobody seems to notice, is broke.
The analysis comes a day after the Fed said it may need to implement more stimulus than the $3 trillion it has already enacted. Democrats are currently proposing $1 trillion bailouts for state and local governments.
Clarence Anthony, the league’s chief executive officer, said: “If America’s cities are not provided the funds from the federal government, we won’t be a part of the economic solution. This survey, and the findings, puts a face on the impact of the pandemic and the need for city leaders to get direct funding to respond quicker than at the state level, where most of the funding has gone in the past.”
He continued: “If any communities are facing a big challenge in America, it’s the small cities that may be wiped out, not only by the pandemic and the lack of access to health care. They’re being wiped out because of the loss of jobs to the small businesses, the loss of industry, and loss of hope.”
The numbers are starting to pile up for major cities: San Francisco is expecting budget shortfalls of $3.6 billion over the next four years and Houston is facing a $169 million shortfall, causing it to furlough 3,000 workers. Houston will have to use its rainy day fund to balance its budge.
Good, that’s what a rainy day fund is for.