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Cities Have Never Seen A Downturn Like This, And Things Will Only Get Worse


American cities and towns are bleeding money right now. The pandemic has sent tax revenues falling off a cliff, and local governments are cutting services and laying off workers. As NPR's Jim Zarroli reports, help is on the way from the federal government, but it won't reach everyone.

JIM ZARROLI, BYLINE: Houston Mayor Sylvester Turner doesn't mince words about his city's plight right now. It is, he says, worse than a natural disaster.


SYLVESTER TURNER: This virus has had a much deeper adverse impact on the city of Houston than Harvey did, when more rain fell on this city than any other city in the history of the country.

ZARROLI: Turner says, with stores and restaurants shut down and big conventions canceled, revenue from sales tax and fees has plummeted. The city faces a deficit of nearly $170 million. He's proposed temporary furloughs for 3,000 city employees in every department except police, fire and solid waste.


TURNER: We will face the worst budgetary gap in the history of the city of Houston - 184 years old. And this will be the worst budget that we will be having to face.

ZARROLI: And it's not just Houston. More than a million government workers were laid off in April alone - parks workers in Dayton, Ohio, librarians in Tacoma, Wash. And even some very critical jobs are being lost, like a thousand firefighters all over the country.


UNIDENTIFIED JOURNALIST: Just six years out of bankruptcy, and the city of Detroit is facing another major money challenge. Like the entire...

ZARROLI: Detroit has had to cut the pay and hours of most of its employees. With its casinos closed, the city has lost an important source of funding. And the economy tends to decline well before tax revenues fall off, which means things are only going to get worse for cities everywhere, says Emily Brock of the Government Finance Officers Association.

EMILY BROCK: We will see an intense drop in sales tax and especially in your income tax collection between now and November, December. And certainly, we're looking two years out.

ZARROLI: There is some help coming. The Federal Reserve has set up a new $500 billion loan program to help cities and states weather the downturn.

BROCK: For the first time in our nation's history, the federal government has become a lender to state and local governments. This is unprecedented. This is a whole new ball of wax.

ZARROLI: Congress also included $150 billion for state and local governments in the CARES Act. But, like the Fed's lending program, the money only goes to large cities. It won't help places like Newport News, Va. The city is still trying to figure out how much revenue will fall. In the meantime, Mayor McKinley Price says the city has decided to scrap plans for new projects such as a downtown parking garage.

MCKINLEY PRICE: You know, we can't jeopardize our safety services like our fire, you know, and police. So we have to make sure the - those things are in the forefront before we look at projects on the wish list.

ZARROLI: Projects like these are meant to help lure businesses into the city, so Pryce says cancelling them could affect the city's economy far into the future.

PRICE: So, you know, it's kind of a domino effect when you start seeing things like that decrease.

ZARROLI: Even big cities that are getting money from the CARES Act are limited in how they can spend it. It can only be used for costs related to COVID-19. It's not supposed to be used for regular operating expenses. That means cities could eventually see trash piling up, potholes going unfilled and fewer cops on the beat.

Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.