Revenue Shortfalls and Responses from Across the Country

by Aaron Thompson, on April 29, 2020 at 2:33 PM

Since our last post, the economic fallout and revenue ramifications for cities have become much clearer. The federal government has announced further details about CARES Act funds that have been appropriated to support your community.

Here are some of the results cities are seeing and measures they are taking:

  • Arlington, Texas: From the Dallas Morning News, Arlington is planning a $18 million budget cut as a result of sales tax and hotel occupancy tax revenue streams hampered following the temporary-closures of University of Texas at Arlington, Six Flags Over Texas, the Dallas Cowboys and the Texas Rangers
  • Cook County, Illinois: Much like Arlington on a larger scale, Cook County, home to Chicago, is expecting a $200 million shortfall this year as a result of stagnate sales & hotel tax according to the Chicago Tribune.
  • Houston, Texas: The Houston Mayor’s Office has indicated that the city’s budget deficit is projected to be between $170 million & $200 million. The decision has been made to defer the next five police cadet class and institute furloughs to meet a balanced budget, as indicated in a tweet from the Mayor’s Office.
  • Louisville, Kentucky: The city of Louisville is borrowing up to $240 million in a loan to make ends meet. According to a report from WHAS, given the postponement of the tax filling deadline, the city will be delayed in receiving many payments, much like the delayed revenue to the economy as a result of the postponed Kentucky Derby. The $240 million represents four months of budgetary needs.
  • Santa Monica, California: Over the coming 14 months, Santa Monica is projecting a $226 million deficit according a report from the Los Angeles Times. The harsh financial reality and it’s reconciliation resulted in the resignation of it’s city manager.
  • Seattle, Washington: The Seattle Times indicates that the City of Seattle in one of the first states to be heavily hit by the virus, is expecting a $210 million to $300 million deficit to a budget of $6.5 billion. According to the report, the Mayor has issued a spending and hiring freeze to areas outside of the COVID-19 Response.

As was indicated in the recent surveys of mayors by the National League of Cities and the U.S. Conference of Mayors, large municipalities are quickly seeing the impact and needing to make modifications faster than smaller communities. Furthermore, communities with a large tourism base are seeing significant hardship on top of increased expenditures to respond to the virus.

Coronavirus Relief Fund Update

The U.S. Department of Treasury has released additional information about accessing the  Coronavirus Relief Fund for State and Local Governments. While states are in different stages of announcing funding directly to local governments with a population of under 500,000, additional guidance on what the funds can be used for available here.

As instructed by the CARES Act, funds are being given to state governments along with local governments with a population of over 500,000. However, many are currently processing how the funds should be spent. Washington, whose state government has been dealing with the outbreak the longest, has announced that all counties will receiving a minimum of $250,000 in support while cities will receive a minimum of $25,000 to support the efforts (additional information about these allocations will be announced in the coming days). Missouri and Montana have setup task forces to determine spending.

These funds will not be supporting revenue shortfalls but rather necessary expenditures incurred due to COVID-19 that were not accounted for in the budget and incurred between March 1st and December 30th of this year. Over the coming weeks, all states (including yours) should begin making further determinations on how funds will be spent. Details about the amount your state has received is available here.

Paycheck Protection Program Update

One further bit of good news for businesses in your community: Congress has passed an additional $310 billion in funds to strengthen the Paycheck Protection Program to be able to assist more businesses in making their ends meet over the coming weeks. These funds were allocated after an initial depletion this program in two weeks. Those interested can learn more here.

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Topics:local governmentcovid-19localgovcares actfederal governmentdisaster relief funds