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Economics

States, Cities Already Cutting Jobs With Financial Toll Mounting

  • Governments resisted job cuts until well into last recession
  • Swift reversal of economy to deeply depress tax collections
An empty bus station in Philadelphia on March 26.
An empty bus station in Philadelphia on March 26.Photographer: Cory Clark/NurPhoto via Getty Images

State and local governments are eliminating jobs as they brace for the financial impacts of the coronavirus, offering a potential early glimpse of the steps they may have to take as the unprecedented shutdown of local economies devastates tax collections.

The swift action stands in contrast to the approach during the last recession, showing the severity of the revenue losses that some governments expect as businesses are shuttered, millions of workers are idled and tourism grinds to a halt. The shift from a record-setting expansion to a deep contraction in a matter of weeks has caused surpluses to turn into deficits and left mayors and governors racing to gauge the impact, even with Congress discussing a fresh round of stimulus spending that may pump at least $760 billion into local infrastructure projects.