How Is The US Economy Recovering? Cities Warn Of Devastating Consequences If Federal Aid Delayed

Mayors across the country warned Wednesday of significant budget cuts and layoffs that threaten to stall the economic recovery from the coronavirus pandemic unless Congress comes through with direct federal aid.

President Trump has said he favors another of coronavirus relief but Senate Republicans have indicated they are in no hurry to act.

Unforeseen costs brought on by the pandemic, especially for personal protective equipment and disinfecting services, have strained local budgets with the effects likely to ripple through the economy for years.

A survey of 1,100 municipalities by the National League of Cities indicated 74% already have made cuts because of a projected $360 billion revenue loss in the next three years, with 65% delaying or canceling capital expenditures and 32% planning layoffs.

“These cuts drastically impact not only the people who live and work in these communities, but also the infrastructure and essential services that are critical to the national economic recovery,” NLC said in a press release.

The HEROES Act passed by the House last month and subsequently ignored by the Senate provided $1 trillion in financial aid to local and state governments, based on population, most of it unallocated for specific purposes. The CARES Act, approved at the end of March, provided $150 billion in coronavirus relief, but as of Monday, only 36 municipalities, each with populations exceeding 500,000, had received the funds, an average of $7.9 billion each, the NLC said.

“The majority of the 19,000 municipalities below the 500,000-population threshold were excluded from a guaranteed minimum level of assistance,” NLC said.

“NLC recognizes the Treasury’s efforts on sharing funds in the CARES Act, but additional direct funding to communities is an absolute necessity if we wish to maintain the millions of jobs and livelihoods in America’s cities, towns, and villages; support essential services at a local level in every state during the nation’s ongoing health crisis, and facilitate reopening and economic recovery.”

The survey found 61% of cities are delaying or canceling equipment purchases, 24% are cutting community and economic development programs and 13% are making cuts to code inspection, planning and permitting. Summer programs for youth were cut by 66% of communities.

“The potential devastating economic impact of infrastructure project delays and cancellations comes as 32% of cities indicate they will have to furlough or lay off employees, which will add to the already staggering 1.5 million job losses in the public sector since March. Forty-one percent of cities have already or will institute a hiring freeze to respond to these fiscal pressures – making it even harder for these workers to get their jobs back,” NLC said, adding that will further slow the national recovery.