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Illustration: Sarah Grillo/Axios

Cities were already furloughing workers and considering cutting back essential services — including public safety — because of the dramatic drops in the local tax revenue that funds them. Now they're also dealing with turmoil in their streets.

Why it matters: "Unfortunately, the increasing levels of social unrest across the country reallocated efforts and scarce resources away from the former focus of getting state, regional and local economies back to some semblance of normalcy," per Tom Kozlik, head of municipal strategy and credit at HilltopSecurities.

  • "Virus-related safety and health concerns are likely to begin to heighten, especially if the lack of social distancing in recent days causes COVID-19 cases to escalate," he wrote in an analyst note. "This could be another obstacle to the reopening process."

The big picture: The overall budget shortfall for cities, towns and villages is expected to top $360 billion between 2020 and 2022, according to a May National League of Cities analysis. The Upjohn Institute projects a roughly $900 billion shortfall for state and local governments through the end of 2021.

Where it stands: Washington leaders are still far away from passing the next coronavirus relief package, as congressional Republicans and Trump administration officials say they must wait to evaluate the economic impact of the CARES Act and reopening before passing another large stimulus package, per Axios' Alayna Treene.

  • Senate Majority Whip John Thune said this week that the next round of funding isn’t expected until July.
  • Mitch McConnell recently told President Trump and Treasury Secretary Steven Mnuchin that he wants the phase four bill to be narrow in scope and focus on short-term economic relief, not longer-term recovery.
  • A top priority for GOP lawmakers is for the bill to include incentives for people to get back to work, as well as liability protection for businesses that are reopening. 

City leaders are increasingly frustrated that Congress has not stepped in to provide more relief directly to cities, and states are slashing budgets.

  • "Trump is going around saying police can make cities safer. But you know what isn't going to make cities safer is laying off police officers and firefighters," said Cincinnati Mayor John Cranley. "Even if Cincinnati can weather the storm, if my neighbor has to lay off cops, it's going to impact my town."
  • Cincinnati, which is expecting a deficit of $80 million for the fiscal year, furloughed 1,700 employees and hopes to bring them all back July 1.
  • "Our budgets are gutted," said Kansas City, Missouri, Mayor Quinton Lucas. "No mayor knows how bad it's going to get. Everything is on the table when it comes to cuts, and that means public safety, too."

What's next: Congressional Republicans and the Trump administration have said the House-passed, $3 trillion Heroes Act is a nonstarter.

  • The likely pathway is, once GOP lawmakers feel they have properly evaluated the impact of the legislation they've already passed, they will draft their own bill. They will then negotiate that version with Democrats.

Go deeper: Inside the idea of state bankruptcy

Go deeper

Updated 7 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Fauci: "Confident" Omicron cases will peak in February.
  2. Vaccines: The shifting definition of fully vaccinated.
  3. Politics: New York Supreme Court strikes down Gov. Hochul's mask mandate for public areas — Sarah Palin tests positive for COVID, delaying defamation trial — Virginia school boards sue Gov. Youngkin for lifting mask mandate.
  4. World: U.K. to lift travel testing requirement for fully vaccinated — Beijing Olympic Committee lowers testing threshold ahead of Games.
  5. Variant tracker

Business leaders ask de Blasio to improve New York City in the wake of COVID-19

New York City Mayor Bill de Blasio speaking in the city in August. Photo: Noam Galai/Getty Images

More than 150 executives at major firms based in New York City asked Mayor Bill de Blasio in a letter on Thursday to resolve "public safety" and "quality of life" issues set off by the coronavirus pandemic.

Why it matters: The companies, including Goldman Sachs, Bank of America, Vornado Realty Trust and JetBlue, warned the mayor that deteriorating conditions across industries and all five boroughs are preventing the city's full economic recovery.

Updated 1 hour ago - World

Pentagon: 8,500 troops on high alert for possible deployment to eastern Europe

Photo: Anna Moneymaker/Getty Images

Defense Secretary Lloyd Austin has placed 8,500 U.S. troops on "heightened preparedness to deploy" to eastern Europe in case NATO activates its rapid-response force over tensions with Russia, the Pentagon announced Monday.

Why it matters: No decisions have been made to deploy U.S. forces, but the heightened alert level will allow the military to rapidly shore up NATO's eastern flank in the event that Russia invades Ukraine. The Pentagon warned that Russia has shown "no signs of de-escalating," and continues to amass troops on Ukraine's borders.