May 14, 2020

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Today's edition is 1,664 words, a 6-minute read.

1 big thing: Coronavirus derails smart city projects

Illustration: Annelise Capossela/Axios

Large smart city projects were getting a lot of attention and investment from city halls before the coronavirus pandemic. Now, those budgets have all but evaporated and priorities have shifted dramatically.

Yes, but: Some smaller-scale innovations could help cities as they fight to recover from the crisis.

Driving the news: Citing "unprecedented economic uncertainty," Google sister company Sidewalk Labs last week abruptly halted its high-profile bid to transform a formerly industrial Toronto neighborhood into a mini city of the future.

  • "Privacy became a lightning rod" in the Sidewalk Labs proposal, said Alex Ryan of Toronto's MaRS Solutions Lab. "The next proposal will be much less tech-centric and will involve other civic innovation that doesn't involve sensors and data."

The big picture: Local economies have ground to a near-halt due to the pandemic, and cities' precarious financial situations will force tough decisions about what services and products to fund.

  • "It speaks to the economic place we are in right now," said Brooks Rainwater, director of the National League of Cities' Center for City Solutions. "We’re seeing what could be a $250 billion shortfall in local governments year over year, so it won’t just be this year, it will be next year as well."

Still, some tech tools will likely play a crucial role as cities and companies look to open up offices, shops and public spaces over the next several months.

  • For example, dynamic curbs with lights embedded in the pavement — allowing an area to instantly switch between sidewalk and vehicle roadway depending on the time of day — could become much more common as cities look to extend pandemic road closures, Ryan noted.
  • Contactless entry and payment technologies are being considered for public places like transit stations. Autonomous drones may be increasingly used for deliveries and monitoring.
  • Companies are looking to use new digital tools like thermal cameras for temperature screening to help identify possible COVID-19 cases as workplaces reopen.

Be smart: Not unlike what Sidewalk Labs encountered in Toronto, cities need to be careful about technological solutions around reopening that raise privacy concerns.

  • Case in point: Just half of Americans say they'd participate in a voluntary coronavirus "contact tracing" program tracked with cellphones, according to the latest Axios-Ipsos Coronavirus Index.
  • That underscores deep resistance to turning over sensitive health information and mistrust about how it could be used.

The bottom line: "People are starting to flex their muscles and use this experience to be thoughtful about what kinds of technologies they do want to bring in, and not just experiment for the sake of experimenting," said Kelsey Finch, senior counsel at the Future of Privacy Forum, during an Internet of Things Consortium webinar on smart cities I moderated last week.

2. Bloomberg's coronavirus pivot

Illustration: Eniola Odetunde/Axios

Less than a week after dropping out of the presidential race, Mike Bloomberg announced his next major initiative: an online network of mayors and public health experts to help communities deal with the coronavirus.

Why it matters: This allows the billionaire businessman and philanthropist to revisit his most successful political role — longtime New York City mayor — while reestablishing himself as a champion for cities in crisis mode.

  • He's welcomed high-profile speakers — Bill Clinton, George W. Bush, Barack Obama — onto weekly calls with mayors to share their own lessons learned while dealing with crises in office. Joe Biden is today's guest.

For a network of nearly 400 mayors from around the world, the weekly two-hour Zoom calls have become their primary avenue for getting public health updates and sharing successes and hurdles in their own communities.

Bloomberg said the local response initiative is more of a continuation of his foundation's longtime work with cities than a change in direction. In emailed responses to questions from Axios, he said that the effort is about leadership, not politics.

"The insights that come with crisis management experience are useful to every mayor. Partisan politics is a very dangerous thing in a crisis. ... Mayors are leading with facts and data and science."
— Mike Bloomberg

What they're saying: "Even though we're all battling the same virus and the same monster, there are so many differences across the country in how it's going and what mayors are being asked — or in some cases, told — to do," said Paul TenHaken, the Republican mayor of Sioux Falls, South Dakota.

  • The discussion, TenHaken said, "reassures me that there are other people trying to figure out this response as we go just like me."
  • Other mayors — Scott Brook of Coral Springs, Florida; Rick Kriseman of St. Petersburg, Florida; Andre Sayegh of Paterson, New Jersey; and Melvin Carter of St. Paul, Minnesota (all Democrats) — say they've put to use the advice offered on effectively communicating with their constituents and using data to drive policies.
  • "It seems cliché now to say these times are unprecedented but they really are," said Carter. "Having a real playbook is dependent on learning the lessons of other mayors."

The other side: Bloomberg received endorsements during his presidential campaign from the mayors of cities his foundation has helped over the years through grants and other strategic support — but also some criticism that he was calling in favors for past assistance.

  • Some residents have expressed concern that the platform is pushing a political agenda down to local leaders, said TenHaken of Sioux Falls.
  • "I've had to explain that there's not a Bloomberg political agenda, it's just a desire to give us the tools to lead," TenHaken said. "The coronavirus is not an R or a D issue — it's a public health issue. We're all paddling the boat in the same direction."

Read the full story.

3. Federal relief for cities still uncertain

Illustration: Aïda Amer/Axios

House Democrats on Tuesday released a $3 trillion phase 4 coronavirus relief proposal that would provide $500 billion to state governments and $375 to local governments — welcome news to local leaders who've been pushing hard for funds as city coffers run dry.

Where it stands: The fate of the package is uncertain, as it hasn't been negotiated with House Republicans and the Trump administration.

  • The White House is in "wait and see mode," said White House economic adviser Kevin Hassett during a Brookings Institution briefing this week. He argued that some of the biggest expenditures in the House's Heroes Act could be "putting the cart before the horse," per Axios' Dion Rabouin.
  • Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are still working on legislation to create a $500 billion fund to help state and city budgets.
  • Some Republicans support aid, but they want to ensure the money actually reaches local governments and is spent on COVID-specific shortfalls rather than to address budget problems that existed before the pandemic.
  • For example, Rep. Tom Reed (R-N.Y.) said this week he’s working on such provisions with Menendez and Cassidy to avoid “budget shenanigans.”

The big picture: Emergency federal aid provided by Congress so far is for expenses directly related to coronavirus response. As of now, funds aren't yet allocated to replace lost revenue, which is what city leaders say they need to avoid large-scale layoffs and cuts to services.

  • The current $150 billion set aside for states and cities is only available for jurisdictions of 500,000 or more residents.
  • The Center on Budget and Policy Priorities increased its forecast of U.S. state budget shortfalls from $500 billion to $650 billion.
  • This month, Moody's lowered its U.S. state sector outlook to "negative" (down from "stable"). The last time Moody's gave the sector a "negative" outlook was in early 2008 due to the financial crisis.

What to watch: Senior living (60%), mass transit (45%) and higher education (43%) are the municipal sectors at highest risk for credit deterioration as a result of the coronavirus, per an April survey of municipal bond analysts by Hilltop Securities.

  • A third of credit analysts think $600 billion of additional relief is needed to have a neutral impact on state and local government credit, per the survey.

4. Chart du jour: Coronavirus is devastating state revenue streams

Data: Lucy Dadayan/The Urban Institute; Chart: Andrew Witherspoon/Axios
Data: Lucy Dadayan/The Urban Institute; Chart: Andrew Witherspoon/Axios

Urban Institute data shows collections dropping between 20% and more than 50%, depending on the state, senior researcher Lucy Dadayan tells Axios' Stef Kight — and those figures could get worse as new data comes in.

  • South Dakota is an outlier in the states the Urban Institute has tracked so far. That may be largely because it is one of very few states that did not issue a stay-at-home order. But experts expect to see revenue declines next month.
  • Even after accounting for state emergency savings accounts — which in many states were at an all-time high — 33 states will likely need to fill budget gaps of 5% or more, according to a recent analysis by Moody's Analytics.

Go deeper: States face economic death spiral

5. Bigger, wealthier cities lead on recovery

Illustration: Sarah Grillo/Axios

Big cities have taken the biggest hit from the coronavirus, but they're now ahead of the curve in developing the public health infrastructure to manage the crisis in the future, Axios' Caitlin Owens reports.

Why it matters: Communities that can conduct widespread testing and efficient contact tracing will be better able to keep more of their residents alive and reopen parts of their economies.

New York City, the worst-hit city in America, is now emerging as a national leader in recovery.

  • New York Gov. Andrew Cuomo announced this week that nursing homes in the state must test staffers twice a week, and New York City is offering hotel rooms to help mildly symptomatic patients isolate without exposing members of their household, per WaPo.

San Francisco is testing all essential workers through its partnership with Color, a health tech company, and other Bay Area companies.

The other side: Some smaller areas with fewer cases are also taking important steps. And tech companies say they can help close the gap between wealthy, well-resourced cities and more rural areas.

  • Adobe, Oracle, Accenture and Splunk are helping people in Tarrant County, Texas, determine whether they are eligible for a coronavirus test and then they help them make an appointment at a testing site, Axios’ Ina Fried reports.
  • North Dakota and South Dakota have launched a new contact tracing app.

6. Urban files

Illustration: Sarah Grillo/Axios

Axios Deep Dive: Education upended by coronavirus (Axios)

How coronavirus could make people move (Politico Magazine)

Pandemic slams Main Street: "We're trying to stay alive" (Wired)

Manhattan faces a reckoning if work from home becomes the norm (NYT)

7. 1 good thing: Teens raise funds for supplies

In San Diego, Ruby Gao and Katherine Ge, both 13 years old and eighth graders at Carmel Valley Middle School, raised money to purchase 5,000 surgical masks for agencies confronting COVID-19, the San Diego Union-Tribune reported.

  • "They also donated N95 respirators, blankets and shoes to help those dealing with the crisis," per the paper.
  • "The two girls had been volunteering to organize and perform in talent shows at local senior homes. ... Once the pandemic broke out, they shifted their attention to helping public organizations on the front line."
  • They've recently started collecting supplies for local homeless shelters.

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