The COVID-19 pandemic and its economic effects have created tremendous uncertainty for all parts of society.
Even as some restrictions affecting how we interact in business and in leisure are eased, many of our businesses do not know to what extent customers will return.
Many of our residents do not know about their job futures. People are unsure of how life will be as we move forward when it comes to worship services, concerts, spectator sporting events, recreational league games and other outdoor activities, or even simple gatherings of friends.
Local governments face similar uncertainties.
When economic activity suffers, so do the tax revenues that cities, towns, and counties depend on to deliver services to their residents. But we will not know the extent of these effects for some time.
We will not know the impact on sales tax for the current fiscal year until a few months into the new fiscal year. We will not know for some time how much the bottom lines of our water and sewer utilities will suffer because of the governor’s executive order that requires connections be continued when bills are not paid. We will not know until early next year the impact of the crisis on property owners and their ability to pay property taxes.
Whether in Reidsville, Eden, Madison or any of the cities and towns across North Carolina, the year ahead poses all kinds of unknowns.
That said, we can begin to predict how revenue shortfalls — no matter their scope — will affect local government budgets and the investments that cities and towns make which ripple through the private-sector economy.
In the upcoming fiscal year, our municipalities may reduce investments in infrastructure to try to plan for this uncertainty. That will mean economic development projects delayed or lost. Planning for future projects will likely be approached cautiously to be fiscally responsible and ensure that funding is adequate for critical services like public safety.
Meanwhile, if cuts to services like recreation and senior care occur, our citizens’ physical, social and economic well-being will be hurt.
There is a lot that we do not know, but what we do know is that the buck stops with local government when it comes to providing services like public safety and public health that people depend on daily. To avoid prolonging the economic damage created by this crisis, local governments need help.
As Congress considers a new round of COVID-19 relief, we urge North Carolina’s U.S. House delegation and U.S. Sens. Thom Tillis and Richard Burr to consider the vital role that cities and towns play when it comes to the larger financial health of the state.
And we urge state legislators to consider the same as they distribute federal funds already sent to the state.
Cities and towns did not cause the situation that they now find themselves in; a global pandemic did.
North Carolina local governments have a long history of financial responsibility. Whether as employers or builders of infrastructure, cities and towns and their continued financial health are key to recovering economically from this crisis.
For that to happen, local, state, and federal governments must work together and ensure that lasting damage is not done to how municipalities help drive the state’s economy forward.