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Cities, Counties and States Prepare for Big Budget Hits

No business activity, no taxes, no revenue for governments.

Many of the extraordinary costs associated with the disaster response to COVID-19 will likely be reimbursed at 75% of cost by the federal government. The remainder might be picked up by the state, or here in Washington state, the formula has always been a 12.5% split with the state of the remaining 25%.

The real problem is the lack of business activity and revenue that comes in from sales taxes (in most states) and then business taxes. These will be budget killers for communities. See this Seattle Times article about the current situation in Seattle, Coronavirus crisis could knock $210-million to $300-million hole in Seattle’s budget, city says.

I know that there was an initial message to city departments to be prepared to take a 10% cut in their budgets. In government, the majority of cost is associated with personnel. If there is a vacancy, that is a pretty easy decision not to fill that hole.  I heard on the news that a city in Ohio has already directed all departments to plan on a 18% budget reduction. 

For the city of Seattle, I'd like to see the City Council also take a significant cut. In recent years, they have boosted their own budget by hundreds of thousands of dollars. Maybe it is time to become more frugal on the legislative side of the equation. 

Eric Holdeman is a contributing writer for Emergency Management magazine and is the former director of the King County, Wash., Office of Emergency Management.