The economic outlook of cities across the U.S. has been squeezed from business closures due to COVID-19 restrictions. New York City, Los Angeles and Chicago are already seeing record numbers of businesses permanently close their doors, with hundreds of bankruptcies and thousands of small businesses shutting down for good. Now, as cities look ahead to their next fiscal year in 2021, research shows the economic decline will only compound into the new year.
According to a new report from the National League of Cities, nearly 90 percent of city finance officers surveyed said their city will be less able to meet its financial needs in the fiscal year 2021 than in 2020. That’s an increase from 80 percent who said their city was less able to meet financial needs in the fiscal year 2020 as opposed to 2019. These gaps are the largest recorded by the research group since the Great Recession in 2009.
The report goes on to show how the loss of tax revenue in sales, property and income is projected to be a massive hit to most cities. While some businesses can stay closed and continue to pay property and income tax, many others can’t afford to remain in business while closed and paying taxes.
According to Axios, cities on average expect a 13 percent decline in general fund revenues. Reserve funds for many cities are either depleted or close to depleted, and deficits are mounting into the hundreds of millions in cities like Pittsburgh and New York.