Texas cities need federal help, or coronavirus recession will be longer, more painful

Even as some states take steps to reopen businesses, our nation continues to face public health, economic and fiscal crises that could endure for some time.

These crises are neither “red” nor “blue”; they are red, white, and blue. The novel coronavirus does not distinguish between Democrats or Republicans; nor do its economic and fiscal impacts.

There is no shortage of critiques of the relief bills Congress has enacted, including from mayors and other state and local elected officials. However, it is important to step back and note that Congress acted quickly and decisively to address this crisis in a bipartisan manner and on a scale commensurate with the challenge our nation faces.

Nevertheless, Congress should continue to take bold action – including broad fiscal assistance to state and local governments – to ensure that COVID-19 does not lead to a long recession.

Despite strong rainy day funds, high bond ratings and lean staff-to-resident ratios, Texas cities are far from immune from the fiscal pain inflicted by this virus. Through no fault of our own, we are facing dramatic shortfalls in revenue which continue to hurt city budgets.

These shortfalls are projected to coincide with increased demand for core local government services and the struggles of small businesses and families. If the economy is slow to rebound, we could face additional sales and property tax shortfalls in the next fiscal year.

Without direct, flexible fiscal assistance to state and local governments, our balanced budget requirements set by state law could force cities to reduce staff or cut important services necessary to reopening our economy.

Beyond the pain for our communities, these cuts will exacerbate the nation’s economic downturn. State and local government spending – on schools, police, firefighting, emergency medical services, and municipal utilities – accounts for about 20 million jobs across the nation and 15% of gross domestic product.

If state and local governments are forced to reduce staff and services, we will undermine federal efforts to stabilize the economy, lengthening and deepening any downturn.

Many cities will be forced to cut or reduce services that Texans rely on every day. Some may consider reducing the number of public health inspectors and building inspectors, making it more difficult for businesses to reopen; freezing or furloughing public safety personnel even as crime is expected to increase; deferring infrastructure investment, traffic control and roadway improvements; or scaling back on quality of life programs such as parks, libraries, and museums.

We appreciate that Congress recognized the importance of fiscal assistance to state and local governments when they crafted the Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March.

But the funding leaves out the vast majority of American cities. And it lacks the flexibility that cities will need to overcome this crisis. We fully agree that emergency fiscal assistance should not be used to cover pre-crisis fiscal gaps or to address long-term structural problems, such as underfunded pensions. It should be easy for Congress to include safeguards against that.

Many state and local governments have already announced job cuts and service reductions, and more are on the horizon. Congress must act quickly and forcefully.

In the wake of the Great Recession a decade ago, state and local governments shed more than 600,000 jobs and slashed services. Economists broadly agree that these cuts exacerbated the economic downturn and made the recovery take longer. We hope that history does not repeat itself.

This story was originally published May 9, 2020 at 7:04 AM.