New fiscal years are beginning for local cities, counties and other taxing and service districts. Like virtually everything else, those entities will suffer long-term effects from the COVID-19 pandemic. They will include belt-tightening that likely will trickle down to many residents, who also will have to lower expectations and adopt austerity for the foreseeable future.
All layers of government are fueled by taxes, primarily those imposed on sales. Business closures imposed to lessen the risk of spreading the novel coronavirus severely cut sales tax revenue, leading to significant budget shortfalls for local and state offices. Those shortfalls are bleeding over into the next fiscal year, both because many closures continue and because some of the next year’s revenue will have to cover overhead, debt obligations and other obligations that don’t go away just because the money’s not there, just like many families still had to pay the bills even if wage earners had lost their jobs to the pandemic-related closures.
Unfortunately, our tax-driven system of funding government means that offices that provide social services have the lowest resources when the need for those services is greatest. People lose jobs and look to public agencies for help, even as those agencies are suffering reduced revenues because higher unemployment leads to less personal spending, and less sales tax revenue.
The longer those revenues are down, the longer those shortfalls will continue and the greater they will be. That is why many officials feel a growing urgency to reopen businesses and restart the economy; not only will new business revenue help resume higher levels of tax that can help provide services, but since those businesses will be rehiring laid-off workers who can thus better support themselves, the need for those services will be reduced.
Obviously, a return to normalcy will be long in coming. Once the money starts coming in, government entities must address past obligations. Also, some services — police, fire, municipal services and mass transportation, for example — are considered so important that they are first in line for funding. Other normal operations, such as recycling centers, golf courses and perhaps security at local parks, might not fall into that category, and might not be brought back online until council and commission members believe they can afford to do so.
Certainly, those non-vital services exist because at least some residents want them. We trust that those people recognize that these tough times and forced austerity could mean a longer wait for enjoying the benefits of those services.
This experience might even bring some residents to question whether some of those budget items are really necessary. Do cities really need to inject taxpayers’ money to support a golf course that relatively few actually use, and doesn’t generate enough revenue to support itself?
Ideally, these lean times have taught officials how to operate their offices more frugally, and enable them to provide more services at lower cost. That could be one long-term benefit of this experience, if any silver lining can be found.
