Budgeting and Forecasting

Equitable Recovery in Practice

Page from April 2021 issue of GFR

Today, almost every city and county in America is facing a once-in-a-generation financial, public health, and economic crisis. Revenue losses from the COVID-19 recession have opened severe gaps in local government budgets, and ongoing pressures on key sectors of the economy raise the fundamental question of whether some cities and counties can fully recover and thrive. In the face of these fiscal challenges, many local governments are also working to address longstanding issues related to health care, poverty, access, policing, and criminal justice that disproportionately burden communities of color—including the disparate impact of the pandemic itself.

These challenges are compounded by the tension among many fiscal recovery initiatives, which often involve service reductions, increases in user charges, or the risk of additional shifts in tax burden on communities already experiencing underinvestment. In other communities, millage rates and imposed fees or fines have been increased to help offset revenue shortfalls. Again, these are pragmatic budget actions. But higher fees to access public services can be particularly challenging for less-affluent residents, especially in places hit hard by job cuts to the retail sector and other lower-wage occupations during the pandemic and its “K-shaped” recovery.

Similarly, many local governments have curtailed or even frozen new capital spending, seeking to manage scarce near-term resources by deferring costs wherever they can. However, such deferred investment can translate to declining conditions for neighborhood roads, parks, and facilities in lower-income communities already battling underinvestment.

There are no easy resolutions, and economic and fiscal conditions will likely remain strained for at least the next few years. Nonetheless, as state and local governments manage these tensions, it is critical to make equity central to the recovery process. Not only can such an approach help to better share the short-term burdens required to weather the storm, but it can also help position governments for long-term, more sustainable progress as communities emerge from this crisis.