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‘Economic tsunami’: US cities and states hit by Covid-19 face dire budget cuts | World news

‘Economic tsunami’: US cities and states hit by Covid-19 face dire budget cuts | World news


Every day, New Yorkers throw out 10,000 tons of trash – a third of which is food and yard scraps that could skip the incinerators and landfills and be turned into compost.

Over the last several years, a curbside pick-up program allowed New Yorkers to compost their food and yard scraps by putting them in a brown bin from the city that would be picked up just like trash.

Then the Covid-19 pandemic hit.

Along with over 200,000 cases of the virus and 20,000 deaths, the New York City, like many of its residents, took a hard economic hit due to mandatory stay-at-home orders. Facing a $9bn deficit, Mayor Bill de Blasio slashed $5bn out of the city’s budget. The city’s composting program was completely gutted, save for about $3m to allow for a few dozen community composting outlets to run.

The move is “probably the biggest environmental reversal of a policy in the De Blasio administration”, said Eric Goldstein, senior attorney and New York City environment director for the Natural Resources Defense Council. “This was a program that already was underfunded and a concept that had not expanded citywide as planners and waste experts have suggested was necessary for years.”

The decision will be just one of thousands that will affect people across the US in the coming months as cities and states wrestle with the devastating economic impact of the coronavirus. Decisions that will cost people their jobs and residents services they have loved or relied upon.

Across the country, state and local governments are facing dire budget deficits. With falling personal income tax and sales tax revenue, state budgets are looking at an estimated $500bn shortfall over the next two years. Local budgets are not looking bright either: nearly all cities with populations over 50,000 are expecting revenue shortfalls this year.

State and local governments fund nearly every public good that directly touches Americans, from public schools and parks to police departments and trash collection. They employ over 18 million people, and spending by state and local governments make up about 9% of GDP.

School buses parked in Leesburg, Virginia. Most vulnerable to state K-12 education cuts are school districts that serve students from low-income communities.

Most vulnerable to state K-12 education cuts are school districts that serve students from low-income communities. Photograph: Jim Lo Scalzo/EPA

Some states have already taken drastic measures to offset revenue shortfalls. At least four states – Idaho, North Dakota, Oklahoma and Texas – have announced across-the-board cuts to all state agencies by at least 5%. Florida, which is still dealing with thousands of new Covid-19 each day, announced budget cuts that the governor likened to Game of Thrones’ infamous Red Wedding scene, slashing $1bn in funding from education and social services, including the state’s affordable housing program.

So far state and local governments have largely avoided mass layoffs, turning instead to hiring freezes and temporary furloughs to try to rein in spending while keeping employees on payroll. Michigan and Washington temporarily furloughed employees, requiring workers to take unpaid days off.

But one sector of government that is already seeing waves of layoffs is higher education, one of the largest chunks in state budgets. Colorado, Ohio and Wisconsin have already made huge cuts to their higher education budgets, with other states likely to follow.

Mike Tosko and his wife, Angela Bilia, were two of 178 faculty members at the University of Akron to be laid off. Tosko, a tenured professor on the university’s library staff, and Bilia, a non-tenured track English professor, had worked for the university for 17 years. While they were expecting staff layoffs, it came as a surprise to them that they both would be cut.

“It’s kind of pretty cruel, really. We’re the only married couple to be laid off,” Tosko said. Since the faculty union is going into arbitration with the university to fight the layoffs, Tosko and Bilia cannot apply for unemployment insurance since they have not formally been laid off. But they are not getting a paycheck, and the university is no longer paying for their health insurance. With two sons, health insurance on Cobra – the program that allows the newly unemployed to continue receiving their work health cover for limited periods – costs about $2,000 a month.

Some states have chosen to target their higher education budgets in an attempt to protect their K-12 education budgets, which makes up the largest portion of spending in state budgets. Still, some states have had to make deep cuts to their K-12 budgets: Georgia slashed $950m from its K-12 funding while Nevada squeezed out $156m from its education budget.

Cuts to state education budgets have already put educators and policy experts on edge. During the Great Recession, an estimated 300,000 school employees were laid off and by 2011, education funding in the country dropped 4%. Research has traced direct links between cuts to funding and lowered student performance.

Most vulnerable to state K-12 education cuts are school districts that serve students from low-income communities. When a state cuts funding from all school districts by the same percentage, schools that rely more on state funding, which tend to be schools in high-poverty areas, end up losing the most funding. Schools in wealthier districts rely more on local property taxes for funding and are not as adversely impacted by state budget cuts.

A recent analysis from the Education Law Center pointed out that New York, which cut funding for schools depending on how much money each school got from federal aid in the Cares Act, ending up reducing the most money from its poorest school districts. Meanwhile, Ohio’s governor took a more targeted approach and cut higher percentages from wealthier school districts that got less state funding.

“In the Great Recession, we saw huge layoffs … the majority of which were in high-poverty districts. We can’t repeat those mistakes,” said Ary Amerikaner, a vice-president at the Education Trust and a former education deputy assistant secretary for the Obama administration.

As the Senate negotiates with House Democrats on a new stimulus deal, many state and local government leaders have spoken out about the need for more federal aid. The National Governors Association has asked the Senate to include $500bn in unrestricted funding for state and local governments. Without it, “we will need to make steeper cuts and reduce payrolls even more, at precisely the time these services are needed the most”, the association said in a statement

Multiple governors and mayors have painted bleak pictures of what the future would look like without additional federal funds. The New York governor, Andrew Cuomo, alluded to layoffs and big budget cuts without federal aid. California’s governor, Gavin Newsom, laid out a state budget with $11bn cuts that would happen if the state does not get at least $14bn in aid. Some states, like Illinois, have passed budgets with the expectation that they will be receiving federal dollars.

Democrats have advocated for nearly $1tn in relief to state and local governments, but it is unclear how much the Republican-controlled Senate will allocate to states. Donald Trump and his administration have balked at the idea of giving states that much money, with Trump saying that Democrats want to assist “poorly run states”.

Without a deal for those working – and living – in those states, the future is looking increasingly bleak. “The impact is dramatic. The declines are so deep and so vast,” said Lucy Dadayan, senior research associate at the Urban Institute’s Urban-Brookings Tax Policy Center. “Overall, the states were in a great place prior to the pandemic, and it just hit states like an economic tsunami.”


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