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Local Governments Stare into Fiscal Abyss During Pandemic


FILE - A woman wears mask as she walks past an "open" sign cafe in Evanston, Ill., May 29, 2020.

Walloped by the COVID-19 pandemic, cities and towns across America are grappling with revenue shortfalls that threaten to disrupt basic services their residents have long relied on.

Despite preemptive layoffs and service cutbacks, Evanston, Illinois, a suburb of Chicago, is bracing for a revenue shortfall of $8 million to $12 million below the city's operating budget of $117 million.

"It's about a 10% loss, which … is significant," Evanston Mayor Steve Haggerty told VOA. The mayor said his city, like many others, needs more federal assistance to weather a severe economic downturn that is straining municipal coffers. "If aid is not provided to local governments, I do worry that we'll see further cuts, possibly in 2020 and 2021 certainly."

Local governments shoulder a wide range of responsibilities, from operating school districts and police and fire departments to keeping the water running, collecting trash and repairing roads. Unlike the federal government, which is borrowing trillions of dollars to cover the biggest-ever projected yearly deficit in U.S. history, local governments pay for general operations with the funds they have on hand.

FILE - People eat outside of a restaurant in Evanston, Ill., May 29, 2020.
FILE - People eat outside of a restaurant in Evanston, Ill., May 29, 2020.

President Donald Trump has sent mixed messages about aid to local governments. For months he opposed assisting Democratic-run cities and states he alleged had mismanaged their finances. On Friday, however, the president tweeted he is "ready to send more money to States and Local governments" but accused congressional Democrats of holding up a deal.

Indirect federal aid

While Evanston has received no direct federal assistance tied to the pandemic, Cook County, which includes Chicago, has parceled out federal aid to municipalities within its boundaries, including $620,000 for Evanston — an amount that only modestly alleviated the city's funding gap, which continues to grow.

City Alderman Robin Rue Simmons of the 5th Ward said her ward was vulnerable to fiscal fluctuations before COVID-19.

"We definitely need support from the federal government to help us serve our residents," Simmons told VOA. "We are looking at devastating impacts on our families, on our environmental assets, possibly on our city staff, and we are hopeful that we can get federal funds and community partners that will allow us to sustain the important work that we have been doing to this point."

FILE - A sign encouraging social distancing is seen at Independence Park in Evanston, Ill., May 29, 2020.
FILE - A sign encouraging social distancing is seen at Independence Park in Evanston, Ill., May 29, 2020.

Uncertainty abounds going forward, according to the city's chief financial officer, Hitesh Desai. "It's a long range because we don't know how the COVID progresses. That will have a big impact on the city of Evanston, just like any other community in the country," he said.

Any future federal assistance for local governments has been thrown in doubt by the inability of Democrats and Republicans in Congress to agree on a new aid package. Congress is in recess until September.

Evanston, meanwhile, is weeks away from the start of the 2021 fiscal year on October 1. Desai said if things get worse, the city may consider raising taxes next year, an idea the mayor dismissed so long as the pandemic rages on.

Evanston's city council has managed to keep essential services like the fire and police departments operational while scaling back other operations like maintaining city parks. Alderman Donald Wilson of the 4th Ward said retaining the municipal workforce despite a "very large loss of revenue is a challenge," and that the city has had to resort to furloughs and a hiring freeze.

College football suspended

Evanston is a college town, home to Northwestern University, a major employer and revenue generator for the city. Not only is the university continuing to limit on-campus, in-person instruction, it will miss out on the upcoming American college football season that usually draws throngs of eager spenders to its stadium. Northwestern is part of the Big Ten conference that postponed its fall football season last week.

The decision dealt another blow to the local economy, according to Evanston Capital Planning Bureau Chief Lara Briggs. "The general fund does rely on entertainment tax, hotel tax, all the things that we get when we have a lot of people that come into Northwestern either to attend school [or] to have football games," she told VOA.