Budgeting and Forecasting

Budget Cuts Through Equitable Decision-Making: A City of Toledo Case Study

Image of Toledo from June 2021 GFR

The COVID-19 pandemic has had an undeniable financial impact on local governments. According to surveys conducted by GFOA, in mid-2020 about 70 percent of cities expected to experience a shortfall in their budget despite state and/or federal aid.

The often-unavoidable response to budget shortfalls is to cut back on spending. The conventional approach to cutting back spending has been the “across-the-board” cut, which applies cuts equally to all areas of service. This approach has been popular because it is simple and is perceived as “fair” to those who have to implement the cuts— oftentimes department managers.

Across-the-board cuts, however, might have an inequitable impact on the different communities that local governments serve. Often, those who feel the consequences of the cuts the most are a city’s most vulnerable, underrepresented groups and communities of color. Some people and neighborhoods have the means to weather the impact of a cutback in government services, while others don’t.

The City of Toledo, Ohio, has recognized the risks posed by across-the-board cuts. Cities need a more nuanced view of how to cut budgets fairly. Applying an equity lens to budget cuts can help cities reduce budgets to an affordable amount for the city while minimizing harm to vulnerable members of the community. In fact, severe financial difficulties often present an opportunity to rethink traditional approaches to public finance. Applying an equity lens can be just such an opportunity.