Local government layoffs endanger economic recovery

Since the beginning of the COVID-19 pandemic, local government creativity and courage has remained abundant, but funding has not. Just as the nation begins to consider reopening, rising COVID-response costs are forcing U.S. communities to lay off the very staff that will be the frontline of the economic recovery. To avoid this, we must provide federal financial aid to our local governments.

Right now, local governments face fiscal challenges from every direction. Saving lives and fighting the pandemic is expensive. An ICMA survey of American local government leaders conducted in March shows that our communities are spending a combined $2 billion a month on unbudgeted COVID-19-related expenses. This unbudgeted figure is expected to total as much as $26 billion by the end of the summer. And that is just what doesn’t fit into existing line items; total COVID costs will be much higher.

At the same time, local government revenue has plummeted. Sales and service taxes, for example, have all but evaporated. Similar forces have reduced other government revenue streams like parking systems, utilities, and transit, as well as fees and fines. Additionally, some federal efforts to help individuals and businesses, such as delaying tax filings, have further reduced local government cash on hand. Taken together, these losses are staggering. Los Angeles alone is predicting as much as a half-billion dollar revenue shortfall.

Every part of our economy depends on local government in order to function. We are already looking at a slow recovery; municipal and county staffing shortages will add intolerable delays. Businesses of all sizes need health inspections, permitting, and other kinds of verified compliance with local, state, and federal requirements—all of which will be delayed by staffing shortages. Private businesses often rely on the traffic of adjacent public facilities such as airports, parks and other municipal services, which will remain closed until there is staff to operate them. Further, existing and future federal and state recovery programs depend on local administration.

Most communities have done everything they can to avoid letting essential staff members go.

Like other employers, communities have cut benefits, hours, and salaries to keep people on the job. More recently, communities have furloughed employees and provided fully paid health benefits to help tide them over.

But now almost three months into this crisis, local governments have run out of options. With all resources directed to immediate life saving priorities, many new furloughs are unpaid—or worse. Just last week, Monterey, Calif., announced 84 layoffs—a city which endured the Great Recession with just 17 layoffs. This is happening all over the country.

To preserve our recovery frontline until the pandemic is contained, our federal partners must extend robust aid to local governments. The three essential pillars of this aid are crucial:

First, reimburse all local governments for both their lost revenue and increased COVID-19 spending. While cities with populations larger than 500,000 are eligible to receive direct aid to reimburse them for allowable COVID-19 expenses, there is no provision that compensates them for dramatic revenue losses. An immediate aid package of $250 billion is needed to keep thousands of city and county government workers providing essential services until the recovery begins in earnest.

Second, to make those dollars go even farther, don’t make local governments pay for COVID-related FEMA grants. Requiring local governments to contribute a cost-share to receive disaster emergency funding is not realistic when already-scarce resources are committed to saving lives.

Third, give local governments the same tax credits that Congress provided to the private sector to offset the expense of the emergency paid leave. The tools provided by the Families First Coronavirus Response Act have successfully kept thousands of privately employed people in their jobs. It isn’t too late for every municipality and county in the country to benefit from the same tools.

As our nation addresses this generation-defining moment, it’s essential that we do everything in our power to both protect lives now and prepare for the future. The federal government must extend this necessary support to the local governments on the front lines right now, so they can be there when it’s time to recover.

Marc Ott is Executive Director of the International City/County Management Association and former City Manager of Austin, Texas.