Cities across the United States are cutting on planned spending to balance their budgets after absorbing unexpected costs related to the health crisis. As a result, more than 700 cities in the country have had to put a stop to plans that include roadway improvements, equipment purchases, and upgrades to water systems and other critical infrastructure, informs The Washington Post.
The spending cuts could lead to a deterioration of municipal services and hurt local business, according to the National League of Cities (NLC), which released in late June a survey on the financial impact of COVID-19 on U.S. cities, towns and villages. It found that 74% of municipalities have started making unavoidable cuts and adjustments, to respond to projected revenue losses.
Cities are seeing declines in tax revenue as business close, people lose their jobs and tourism goes on pause. Cities anticipate needing about $500 billion from the federal government to help recover from the declining tax revenue and other costs resulting from the pandemic.
NLC’s CEO and Executive Director Clarence Anthony said: "Without congressional action now, the forced delay or cancellation of infrastructure projects will create an economic ripple effect throughout the nation not felt in decades.”
Delay and cancellation of capital expenditures and infrastructure projects are expected to slow down local economic activity, risking economic recovery efforts throughout the country. State and local governments continue to struggle, even as the private sector has begun to recover. More than 1.5 million city and state workers have lost their jobs, including teachers, support staff and other employees in schools.
In March, the $2 trillion Cares Act allocated $150 billion to help cities and states with the costs of dealing with the health pandemic, including personal protective equipment. However, the money is subject to some limitations: it cannot be used for budget deficits, plus most of the money is channelled through states, making smaller cities having to deal with bureaucratic procedures.