Jun 25, 2020 - Politics & Policy

Cities put major construction projects on hold as coronavirus budget crunch looms

Construction workers wearing masks work on a road in New York City in May.
Construction workers wearing masks work on a road in New York City in May. Photo: Alexi Rosenfeld/Getty Images

Major infrastructure projects have been put on ice, economic development programs are getting the ax, and workers are losing their jobs.

Why it matters: These are the realities for localities dealing with multimillion-dollar budget holes while also continuing to pour money into COVID-19 response as cases spike.

By the numbers, per a survey of 1,100 municipalities by the National League of Cities:

  • 65% of cities are delaying or canceling capital expenditures and infrastructure projects, with 61% of cities delaying or canceling equipment purchases.
  • 24% of cities are slashing community and economic development programs.
  • 33% of cities say they will have to furlough or lay off employees.
  • 20% said cuts are happening across the board, 54% said they are more targeted.

Job losses are mounting at the local level, with more than 1.3 million jobs lost since March, according to numbers from the National Association of Counties.

  • Most job losses were related to education, but more than 523,000 job losses included social workers, law enforcement, maintenance crews and construction workers.

"There will be a lot of cuts to parks and recreation and economic development programs — things that are important but maybe not essential," said Michael Belsky, executive director of the Center for Municipal Finance at the University of Chicago’s Harris School of Public Policy.

  • A number of local officials have said they don't plan to raise taxes to fill funding gaps, but the option may soon be on the table as the pandemic drags on and rainy day funds and borrowing capacities are exhausted.
"The worst time you can tax people is when their incomes are down. Many places are furloughing people, property values will be depressed. You don't have enough income and demand for housing so prices will go down, and property taxes will go down. All these things point to very difficult decisions."
— Michael Belsky
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