California – What Comes Next for Cities? Deficits, Bailouts and Long Recoveries

Cities have been ground zero in California’s coronavirus response — with many initiating shelter-in-place orders, organizing emergency housing for homeless people and supporting health and essential workers. But even before restrictions get lifted, mayors, managers and city councils are being tested in a new way: pandemic-induced budget deficits.

Already, unemployment is projected to be higher than it was during the Great Recession. Sales and property tax revenues have cratered. And while some of a $150 billion Coronavirus Relief Fund tucked into the federal stimulus CARES Act will go directly to large cities with a population of 500,000 or more, the League of California Cities has already declared it insufficient.

California cities are increasing the clamor for a federal bailout. Whatever reserve they may have built up during the recovery is being wiped out and replaced by red ink. City hall leaders now face an unsavory menu of service cuts, furloughs and staff reductions. Public employee pension and health care obligations will only add to the pain.

For more Information: Daily Democrat

daily democrat
by jim smith
april 20, 2020