Governance: Local Government Finance Initiative

As we have grappled with the public health and economic challenges caused by the spread of Covid-19, strains in our governmental systems have become increasingly visible. The statewide closure of nonessential businesses has sent economic shockwaves through the region, especially among our region’s most vulnerable communities. Since the Covid-19 closure began in mid-March, Pennsylvanians have filed 1.65 million unemployment claims. Across Pennsylvania and our region, people, businesses, and communities are facing significant economic stresses and, in many cases, long-term economic impacts.

The personal hardships of our region’s residents are also resulting in for many local governments a significant decrease in their revenue streams. A recent survey by the National League of Cities and the U.S. Conference of Mayors showed that nearly all municipalities are expecting a budget shortfall because of the pandemic driven by unanticipated revenue declines. Many local governments believe that these revenue declines will result in furloughed or laid off employees, which will impact the delivery of municipal services. For our region’s local governments, this will have a profound effect on their financial health and ability to deliver effective municipal services, especially for municipalities that serve our most vulnerable populations.

Unlike for businesses, states, and large cities, southwestern Pennsylvania’s local governments have been largely left behind in federal stimulus efforts. What little federal stimulus that has been allocated for local governments has been directed to municipalities and counties with populations over 500,000, a threshold that only Allegheny County qualifies for in the region.

In response to this crisis, the Institute has convened its Fiscal Policy and Governenace Committee to formulate a coordinated local government response to the loss of critical tax revenue. The Institute envisions taking on a project that will provide local governments guidance and resources to help inform their financial decision making in the wake of the COVID-19 pandemic and improve the long-term sustainability of Pennsylvania’s municipalities.

This policy strategy is still in development.