Dec 14, 2020 - Economy & Business

Cities are bleeding revenue because of COVID-19

Illustration of a fan blowing cash

Illustration: Sarah Grillo/Axios

U.S. cities have seen a 21% drop in revenue since the pandemic began, while extra expenses — for PPE, remote work technology and overtime pay — have risen 17%, a survey of 900 municipalities by the National League of Cities found.

Why it matters: The stats give fresh ammunition to municipal leaders who are pressing members of Congress for more federal aid. They also translate to terrifying budget choices for city officials everywhere.

Driving the news: In addition to the survey, the National League of Cities issued a report saying cities are likely to face problems similar to the ones they saw during the Great Recession.

  • "Local budget cuts from the Great Recession weakened public health infrastructure so deeply, it left many cities underprepared for the current pandemic," the report said. 

The details: Only 7% of cities that got funding from the CARES Act Coronavirus Relief Fund said the funds "adequately addressed their revenue shortfalls and unforeseen expenses," per the National League of Cities survey.

  • 37% said they've had to cut their municipal workforce, "including hiring freezes, wage holds, layoffs, furloughs, reduced hours or forced early retirement of municipal employees."

What they're saying: "The financial stress on us right now is crippling," Andy Berke, mayor of Chattanooga, tells Axios. "We have more demands than ever from our constituents."

  • Mayor Steve Adler of Austin told me: "Our real choices are really on who you help and how you help them — those are the most difficult choices, because there is such great need."
  • For example, "We don't have the capacity to help all the restaurants in our city that our suffering — we desperately need federal assistance."
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