America’s Cities Call for Federal Rescue from Economic Collapse

(Bloomberg) -- America’s local governments are asking the federal government for massive amounts of aid as the fallout from the coronavirus pandemic threatens to leave them contending with significant budget shortfalls.

On Wednesday, the nation’s mayors requested $250 billion to help cushion the blow to cities stung by the disappearance of tourism, layoffs and the shutdown of schools. With subway and train ridership plunging, New York’s Metropolitan Transportation Authority has asked for a $4 billion bailout. And counties are seeking additional help from Washington as shuttered businesses cause tax revenue to disappear.

George Latimer, the county executive of Westchester County, New York, told reporters Wednesday that his government has been in “budgetary free fall” since it was hit by the coronavirus epidemic.

“We do need federal resources,” said Latimer. “It’s going to take the federal government to do what states and counties and local governments cannot.”

The pleas came as President Donald Trump’s administration and Congress work on a stimulus plan to offset the severe slowdown as much of the American economy grinds to a halt. The plan, initially estimated at about $850 billion, has since swelled to $1.3 trillion, reflecting the escalating degree of help that’s needed as the crisis continues to worsen.

At the local level, the shutdown has had swift impacts on transit systems in New York, Washington, D.C., and San Francisco. But with restaurants closing down, concerts and sports games canceled, and workers idled, states and local governments are poised to see a significant amount of tax revenues disappear. New York City has estimated it could lose more than $3 billion over the next six months.

The potential financial strain has raised worries on Wall Street, where investors have been selling municipal bonds backed by airports, hospitals and others likely to be affected.

The U.S. Conference of Mayors said the $250 billion could be used to help cities operate and provide aid to workers and small businesses.

On a conference call with reporters Wednesday, Matthew Chase, the executive director of the National Association of Counties, said localities first need to ensure they have the liquidity to cover immediate costs of the pandemic.

In addition to overseeing public health systems, counties have to keep up with pension and bond payments that are fixed, regardless of how their tax revenue changes. He said they also need to work with credit-rating companies to avoid seeing their bonds downgraded because of the emergency, which would drive up their borrowing costs.

“We have a lot of things to think about, but the first immediate is definitely making sure we have the cash flow,” Chase said.

In Suffolk County, New York, one of the biggest concerns is impact to the local economy, said county executive Steve Bellone. The county is collecting data from local businesses so it can ask the state and federal government for what is needed to help these businesses survive, he said.

“It’s devastating,” Bellone said. “There’s desperation out there.”

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