Coronavirus Impact on County Budgets Projected to Total More than $200 Billion

Robert Rowley, director of the Maricopa County Emergency Management Department, removes his face covering as he prepares to speak at a July 16 press conference.

Robert Rowley, director of the Maricopa County Emergency Management Department, removes his face covering as he prepares to speak at a July 16 press conference. Associated Press

 

Connecting state and local government leaders

Increased costs related to the Covid-19 response coupled with decreasing revenues have counties bracing for a budget shortfall through at least the next fiscal year, according to a survey by the National Association of Counties.

Counties across the country, reporting increased costs and plummeting revenue from the ongoing coronavirus pandemic, anticipate a budget impact of at least $202 billion through the 2021 fiscal year, according to the results of a survey from the National Association of Counties.

“America’s counties are facing immense fiscal pressure as we continue to fight this unprecedented public health and economic crisis,” Teryn Zmuda, NACo’s chief economist, said in a statement. “The fiscal impacts of the coronavirus pandemic will be felt by county residents across the nation, as services are reduced and local governments make difficult decisions while balancing already strained budgets.”

The projected shortfall includes a $114 billion loss in county-generated revenue, a $58 billion loss in state funding and $30 billion in expenditures related to Covid-19 response, according to the results of the survey, which includes 197 counties in at least 38 states. Nearly 90% of respondents said their budgets had been impacted by the pandemic, with some reported deficits higher than one-third of the county’s general fund. 

Sixty percent of those counties said their revenues have decreased, while 69% of counties that collect local sales tax said that revenue had declined between 7% and 41%. In Los Angeles County, California, for example, officials cut 8% of funding from every county department to account for a $935 million tax revenue shortfall.

Funding help will likely not come from state governments, which are facing a $555 billion budget shortfall through the 2022 fiscal year, according to analysis by the Center on Budget and Policy Priorities. As a result, counties in 38 states have been told to expect cuts in state funding, which comprises 24% of municipal revenue nationally. 

Those funding gaps have already led to concrete impacts. Seventy-one percent of counties reported cutting or delaying capital investment projects, including infrastructure and economic development, while 25% have cut their workforce through furloughs, layoffs, or requests for early retirement or reduced working hours. Some of those reductions are extreme. In Cuyahoga County, Ohio, for example, 47% of employees—7,100 out of 14,739—have been laid off or furloughed. Forty percent of counties that have already made staff reductions expect additional cuts within the next 12 months.

Federal relief funding, distributed to states via the CARES Act, helped alleviate some of those issues, but two-thirds of counties receiving that money said either that it would not cover their coronavirus-related costs or that they were uncertain if it would be enough. County officials are hoping for additional funding in the next Covid-19 relief package, currently in the early stages of debate in Congress.

“We are calling for aid that recognizes counties’ vast responsibilities, many of which are mandated by states and the federal government,” NACo Executive Director Matthew Chase said in a statement. "As we work to save lives and restore the economy, we need investments in our local communities while balancing overall concerns about the national debt and deficit.”

Kate Elizabeth Queram is a staff correspondent for Route Fifty and is based in Washington, D.C.

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