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For Cities, This Is a Fiscal Disaster

America’s smaller towns and cities face a fiscal calamity. The next federal stimulus must save the local governments that face a financial crisis due to the coronavirus.
A line of shuttered shops in downtown Cincinnati.
A line of shuttered shops in downtown Cincinnati.Ian Johnson/Icon Sportswire via Getty Images

Until two weeks ago, I was serving as the assistant city manager for the city of Cincinnati. In this role, I helped advance and coordinate large economic development projects, like the new high-rise apartment complex just built in the booming Over-the-Rhine neighborhood and the downtown stadium under construction for the city’s Major League Soccer team, FC Cincinnati. I assisted with parks and recreation management, shepherded legislation through the City Council, worked on energy projects like Cincinnati’s effort to go 100% renewable through the use of solar energy, and coordinated with federal and state government agencies. I had been serving in this role for nearly five years, with no end in sight and exciting projects on the horizon for the community.

Then the coronavirus hit, stores and workplaces were shut down, tax payments were delayed, and Cincinnati suddenly faced a budget hole of over $75 million, with a state deadline to achieve a balanced budget by the end of June. Like many of my colleagues, I was placed on emergency furlough. About 1,700 city employees — a fourth of the overall city workforce — have been put on temporary leave, including the majority of the city planning department, neighborhood development officers, and the staff running the city’s award-winning low-income and school-based dental clinics.

This financial pain is structural and not anyone’s fault. Cities and states depend on April tax receipts for revenues, and this year these have been delayed until July or longer. All major cities in Ohio are dependent on an earnings or income tax, putting us in a particularly precarious position. In only a month, Cincinnati saw nearly a $100 million fiscal deterioration in its position for this fiscal year and the next, partially due to its dependence on earnings taxes for 70% or more of its general fund. Other cities saw worse: Facing acute shortfalls, Akron, Ohio, immediately laid off more than 400 city staff and prepared to cut the city budget by 25%. There is no way that even the best prepared, most fiscally responsible communities could sustain such an immediate blow, let alone the recession that is now underway.