Pennsylvania Leads Nation in Local Government Revenue Loss Due to Pandemic

According to a recent analysis by the National League of Cities, Pennsylvania leads the nation in a very dubious category — local government revenue loss due to the pandemic.  Cities, boroughs, towns and townships across the Commonwealth will sustain an overall loss of $6 billion representing 40% of local revenues.   

Gettysburg Borough implores Pennsylvania’s U.S. delegation to support direct federal assistance to municipalities.  There will be no recovery for the country or commonwealth if local governments do not recover.

The chart below identifies the states most fiscally impacted across the country.

States with Most Severe Revenue Loss for Cities, Boroughs, Towns, and Townships as a Share of Total Own-Source Revenue by State (2020)

Click here to listen to a broadcast on WITF's Smart Talk - May 28, 2020.

Amid significant uncertainty about the impacts of the pandemic recession in the mid- and long-term, cities, towns and villages across the country are bracing for significant budget shortfalls based on how their unique fiscal and economic structures are responding. Given nationwide shortfalls for cities approaching $360 billion over the next couple of years, the question quickly turns to what do we do about it?

If local governments are left in a position to go-it-alone, the economic implications will be disastrous. Given state- and voter-imposed restrictions on local taxing authority as well as political challenges, local governments are limited in levying new taxes or raising existing ones. Increases in sales, income or other types of tax rates are even less common, and in the current environment, would prove fruitless. As a result, cities can either cut services or increase the fees charged for services, which places greater financial burden on businesses and residents, particularly those who can least afford it. In response to the current pandemic, cities have not been imposing new fees, but have gone to lengths to spare communities by deferring property tax payments, suspending business license fees, and cancelling library late charges.

Cities therefore are turning to their options of last resort, which are to severely cut services at a time when communities need them most, to layoff and furlough employees, who comprise a large share of America’s middle class, and to pull back on capital projects, further impacting local employment, business contracts and overall investment in the economy. These cuts will also exacerbate infrastructure challenges, which will place future fiscal burden on local, state, and federal government.

With states likely to cut aid to local governments to help alleviate their own budget pressures, federal support for cities, towns and villages is more critical than ever. Without it, we estimate that nearly 1 million municipal workers could be furloughed or laid off, resulting in fewer police officers to respond when residents call 9-1-1, fewer firefighters to rush to the scene, fewer EMS responders to help those in need, fewer sanitation workers to keep communities clean, and fewer services for youth, seniors, and the most vulnerable people in our communities.21 Federal relief for local governments who have been on the frontlines of this crisis, is critical to ensuring that families and workers in our communities will be safer, healthier and more prosperous, and that our national economy is resilient in the face of this unprecedented pandemic-induced recession.