Massive revenue loss due to the coronavirus pandemic may force cities across the U.S. to put their infrastructure plans on a halt, per National League of Cities.
Over 700 cities across the U.S. are now planning to stop or delay their infrastructure plans. As per the NLC’s latest survey, it appears that municipalities are unable to provide budgets as local governments burned most of their money in response to fight the pandemic.
Paused infrastructure plans and more layoffs
Based on the National League of Cities recently posted survey, nearly 65% of respondents said that they might not be able to push through most of their infrastructure plans this year. Worst, cities might altogether cancel projects like roadway improvement, water system upgrades, and other crucial infrastructure.
It appears that municipalities today are out of cash due to unexpected spending—including purchases of Personal Protective Equipment (PPEs) and disinfecting services—since the coronavirus hit the country.
The survey, which involves 1,100 municipalities across 50 states, also suggests a bleak future for the youth. Most of the cities that participated in the study said they might slash seasonal programming as well, which includes projects like summer camps and summer youth jobs.
At the same time, about a quarter (24%) of the respondents said they are planning to slash down their budgets for economic and development programs. In comparison, 13% will also make necessary spending cuts to planning, code inspection, and permitting.
The unexpected infrastructure spending cuts are also expected to slow, if not stifle, the local economic activity of each city, which in return could eventually lead to more job loss.
Cash-strapped cities call for federal aid
To avoid possible infrastructure spending cuts, the NCL urged the federal government to provide necessary monetary aid to each affected municipality.
According to reports, cities have asked the US government a total of $500 billion in federal. The organization also warned that without financial aid, the US economy’s path to recovery could be stifled.
The director of Fiscal State Studies, Brian Sigritz, also echoes the same view. In his interview with CNBC, he highlighted the importance of additional federal aid to the U.S. economy’s recovery.
“States are facing significant increased spending demands, sharp revenue declines, and all states are facing budget gaps and shortfalls. […] If we do see additional federal aid, it could lessen the need for budget cuts in some of these areas, such as public safety, health care, education, transportation,” Sigritz told CNBC.
The U.S. commerce department recently released data showing the weak economic activity of each state for the last three months. In New York, the state’s gross domestic product plummeted by 8.2%. The same goes for Nevada, while Michigan’s GDP fell by 6.8% and Louisiana by 6.2%.