City and County Governments in the Time of COVID-19 and the Recession: The Long and Winding Road

The Own-source Revenue Portfolio of Local Governments

Every local government derives revenue from a unique portfolio of own-source revenues—property taxes; local option sales, income, or gasoline taxes; fees, fines, and forfeitures; user charges and charges for services; “amusement” taxes’ and even locally owned parking in the exposure of their key revenue sources to COVID-19-related disruptions.

The typical city or county depends most heavily on revenue generated by the ad valorem (that is, property) tax to supply the bulk of the money needed to provide a large array of services. But, local officials were quick to note that effects of the coronavirus on crucial property tax receipts is lagged, thus creating a key and worrisome unknown for many of them. While local governments usually have a good estimate of expected revenue once tax notices are sent to property owners, turbulent times increase uncertainly. A wave of foreclosures, the potential inability of home and businesses owners to pay property taxes on time, and real estate being reassessed downward due to declining value all mean a precipitous drop in property tax collections could occur. This is what happened in a number of states (but especially California and Florida) during the Great Recession. Simply stated, while a number of local officials expressed anxieties about the losses of property tax revenue in the “here and now” even more of them were quite preoccupied with what may be awaiting them down the road:

➢ “…67 percent of our property tax revenue comes from commercial property, and we don’t know if it will stay down…if it does, we could be in a long recovery for some time…”

While reports of expecting a short or medium-term drop in property tax revenue predominated, some localities were still seeing growth. One medium-sized local government official reported that, even with revenue losses in some areas, they could possibly break even for the fiscal year because of “the property tax base is growing robustly.” More specifically, the manager indicated that his city continues to collect “extra revenue from property tax yields and building permits have shown no weakness, as steady growth continues…” A positive outlook was also reported by a small suburban southern city official where property had been reassessed prior to the outbreak of the COVID-19. As a result, the city was projected to realize enough of a property tax collection increase to offset any losses due to foreclosures and people unable to pay their taxes.

Local officials whose jurisdiction rely heavily on either a local option sales, income, or gasoline tax were also worried about present and future collections. Local governments that depend heavily on revenue from the first two of these sources are obviously uneasy about the steadily rising number of cases of or deaths attributable to COVID-19 which has resulted in the very sluggish economy where consumer spending has slumped significantly. Millions of people have less money to spend due to lost jobs, missed work from testing positive for COVID-19, or leaving the workforce for fear of contacting the disease. Thus, sales tax collections will decrease. Likewise, income tax collections decrease for similar reasons. While income tax collections should rebound quickly when people return to work, the same is not true of sales taxes collection. Additionally, fear of possible recurrent waves of COVID-19 and a lingering recession could lead the public to change normal spend patterns and increase “rainy day” savings, even as income levels return to pre-pandemic levels. Several poignant quotes confirm the uneasiness of local officials about possible impacts on local option sales and income taxes over the next few years:

➢ “…we are seeing a disruption of some revenue streams…but especially our local option sales tax revenue collections…”

The real or potential loss of money that some local governments obtain from a local option gas tax (usually piggybacked on the state gasoline tax) has also become worrisome for local governments. Areas permitted to levy this kind of tax have been able to make vast improvements in roads and bridges in their city or county beyond what state transportation funds could pay for. With traveling declining significantly in the context of COVID-19, one local leader said “…If we were to lose a portion of this funding source for any length of time, our local roads and other transportation infrastructure would suffer for decades to come…”

Other important source of revenue for both counties and cities (usually lumped together for accounting purposes) are fees, fines, and forfeitures. As administrative arms of their states, many counties record myriad legal documents pertaining to the sale of real estate, vehicles, vessels, and businesses, as well as important legal records (e.g., final court orders, marriage licenses, incorporation of businesses and non-profits, etc.). Moreover, both counties and cities issue numerous permits (e.g., various building/health/safety inspections, assembly and parade, etc.), and vocational licenses for electricians, plumbers, barbers/hair stylists, accountants, real estate agents, building contractors, just to name a few). These governments also collect substantial amounts of money from fines for both civil and criminal infractions, and from asset or bond forfeiture (e.g., violating the terms of a criminal bond). Concerns registered by local governments about these types of revenue include:

➢ “…there has been a loss of the Sheriff’s revenue derived from traffic citations since people are not driving as much and there have also been decreases in revenue for the clerk of court office due to a downturn in the recording legal documents…” [county administrator noted that sheriff’s and county clerk’s revenues are a function of housing market and foreclosures]

User charges or charges for services (typically for the use of utilities like potable water, sewer collection and disposal, natural gas, electric power, solid waste collection and disposal, etc.) represent another significant source of revenue, especially for municipalities or even large, highly-urbanized, unincorporated areas. Normally, the money collected from user charges are deposited in “enterprise funds” and kept separate from the general fund since utilities are usually “break-even” operations whereby the city collects just enough to pay for the cost of the provision of these services and maintenance/expansion of facilities. But, that is not always the case, as some governments make a “profit” which they may redirect into the general fund or reserve fund. Yet, a loss in revenue from this source (even if makes no profit per se) can be a serious potential liability for a city or county, as one city official told us:

“…the City has experienced a loss of $46,000 in the last month due to utility disconnect notices and a $100,000 drop in revenue in July, which will means over a $1 million loss in revenue over the year…this is significant since major debt service of our water treatment plant has to be paid from utility revenues…”

An often overlooked but important source of revenue for large urban areas mentioned by a large Eastern city mayor is that of government-owned parking garages and transit systems. He noted that there had been “a significant loss in parking revenue that normally produces $45 million annually.” From a budgetary perspective, parking garages and transit systems are viewed as long-term, large-scale capital investments with a significant debt service. The mayor alluded to above was concerned about the ability of his city to make future bond payments since the city’s parking garages and transit system had been underutilized for the last several months. When prompted for a plan to deal with this potential dilemma, he responded: “We’re going to have to engage in a whole lot of creative budgeting and may be have to make some gut-wrenching decisions if the economy does not rebound soon…”

Short-term adjustments to revenue losses were often the first challenge mentioned by those interviewed. However, as cities and counties potentially face significant losses in most of their primary revenue streams, ¹ those thinking ahead to future financial crises may also explore opportunities to expand and diversify their sources of revenue to the extent allowable under their state constitutions.

Shared Revenues from State Governments

If local governments have too little control over slumping own-source revenue sources mentioned to this point, then they have far less control over money they receive from their state governments (usually in the form of shared revenues). State governments usually share a pre-determined portion of their proceeds derived from taxing personal and/or corporate income, gross retail sales, selective sales taxes (e.g., gasoline, tobacco products, and alcoholic beverages), taxes on crude oil, minerals, insurance premiums, and a host of business transactions. ² In a majority of states, state-shared revenue is either the third or fourth largest source of revenue. How important is state shared revenue to the city and county officials we talked to? Here is what they had to say:

➢ “…we know that we are going to lose gas tax and sales tax funds from the state, but it has not materialized yet…”

Engines of the Local Economy

Whereas the revenue loss concerns of the local officials we interviewed varied as a function of which revenue source(s) they depended on the most, reported exposure to COVID-19 impacts depended on what “drove” their local economies. For several local officials, universities and colleges had a significant influence on the local economy, as well as accounting for a sizable proportion of city or county revenues. With universities moving some or all courses from face-to-face to online delivery, significantly fewer students returned to campus dormitories or to private-sector rental units during the fall. This is creating a critical situation for one Midwestern city that is home to a large university, where many students live off campus. Landlords may not be able to pay a local option city income tax or property taxes on their rental units. In addition, business at local bars, pubs, pizza parlors, sandwich shops, and other student hangouts, is down sharply, resulting in a loss of local sales tax revenue. The same is true for hotels and restaurants that are usually packed on weekends with fans attending college football games or parents and other relatives at any time visiting students enrolled there. There is also the loss of utility revenue because of vacant rental housing. Then, there is the likely loss of property, sales, and income tax due to faculty, staff, and other university employees being terminated, laid off, or furloughed. Perhaps most concerning to this mayor and several other local officials whose governments were in the same situation is the likelihood of a Census undercount due to students not being on campus to be counted. As the mayor of the Midwestern “college town” notes “…the undercount of the 2020 Census could result in a 10-year impact on federal revenue for the city and result in a loss of around $40 million…”

Tourism can also be an important “driver” of the local economy and thereby have a substantial impact on a local government’s revenue collections. Such was the case for some of the local officials we interviewed. These officials shared with us what we already knew from news accounts: spring break college trips were down significantly; families were less likely to go on the traditional summer vacation, week-long excursions by senior-citizen groups to high-destination tourist attractions were noticeably curtailed; adult/children church groups’ trips to beaches and amusement/theme parks were rare; and, cruise lines shut down completely. The result was to send economies in such areas in a tailspin, while local governments were experiencing major losses in revenue, but especially from an amusement tax. Other possible lost revenues would occur if the city and/or county had a hotel occupancy tax or local option sales and gasoline taxes. Moreover, it is quite possible that these governments would suffer additional revenue losses in property tax collections and a local option income tax (if they have one) as businesses (namely, hotels, restaurants, and amusement parks) cannot pay property taxes and laid-off workers report little taxable income. There is also the possibility that state government revenues derived from its sales and gasoline taxes could result is less revenue to share with all local governments in the state, including jurisdictions already impacted by a severe slowdown in tourism.

In addition, many city and county officials talked openly about the crucial influence of certain industries that employ thousands of workers. For example, one city manager indicated that several aerospace facilities made up a significant part of the economy in her area and “they were laying off workers right and left because no one is flying these days.” She continued by saying that her city revenues “were going to get hit hard in the long run” and “lost jobs probably will not come back for at least four years once the recession ends.” She expects that revenue from property and local option sales and income taxes will experience the greatest declines.

Federal Aid

The “wild card” in this overall dismal revenue picture is financial assistance that cities and counties have been receiving from the federal government. This assistance came in the form of the over $2 trillion Coronavirus Aid Relief Economic Security (CARES) Act that Congress enacted in late March 2020. The Act contained four basic components: Employee Retention Credit Program (helps employers keep employees on their payroll); Payroll Protection Program (provides small businesses with resources needed to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead); Economic Impact Payments Program (provided stimulus checks to eligible citizens), and the Coronavirus Relief Fund (CRF)—provided $150 billion for state, local, and tribal governments. In addition, the Congress, through the Federal Pandemic Unemployment Compensation (FPUC) program, provided eligible unemployed workers with a $600 supplement to their normal unemployment benefit payment, as well as extend the number of weeks that workers could collect benefits. While the first three parts of the CARES Act and the FPUC were obviously designed to prop up or stimulate the struggling economy, the purpose of the CRF was to provide direct monetary assistance to subnational governments whose revenues had declined noticeably because of the health care crisis and subsequent recession. In short, the federal money helped these governments to “plug the gap” so that they could continue to provide staple services to their citizens.

Based on our interviews with city and county officials, CARES money was vital for their survival during these unsettled times. In the words of a few city and county officials:

➢ “…CARES money [actually CRF money, but our officials used this term] paid the payroll for public health and public safety for two months…”

While thankful for the availability of these funds, city and county officials nonetheless voiced concerns about the distribution of this money. The chief concern, or perhaps complaint, is that only cities and counties with a population of 500,000 or more were able to receive funds directly from the U.S. Treasury. This means that local governments not meeting the minimum threshold for direct funding must wait for a prolonged period of time to find out if and how their states will share a portion of their CARES money with them. A related concern in some states is that smaller governments may be allocated CARES money at a lower rate than the rate set by the federal government ($180 per capita). This can lead to significant inequities in funding for smaller cities and counties. Therefore, a valid point can be made that it is just as important for smaller counties and cities to minimize the interruption of services to their citizens as it is for larger jurisdictions. In the meantime, these governments are left to worry if they can maintain current service levels while traditionally reliable revenues are declining precipitously. Several of our city and county officials reported that they were lobbying Washington to allow their localities to receive more money directly if there is another round of CFR and were working through one of two channels—their congressional delegation or organizations like NLC, NACo, or ICMA or their state/regional affiliates.

Other reported concerns that their state governments were deliberately withholding money with no intention of sharing any of it with them. In this regard, one city mayor suggested that “the state may be holding onto CARES money in case it needs to fill holes in its own budget,” while a city manager believed that the state was intentionally holding back CARES money since it [the state] has not come out with an allocation formula yet.” This scenario is akin to what some have referred to as “fend-for-yourself federalism. This perspective was shared by several other local officials. Others believed that the state governor and/or state legislature was playing “political games” with CARES money—that is, rewarding local officials of the same party and punishing officials of the opposition party. A few officials provided additional commentary on this view by saying that we are a “blue dot in a red state” or a “red dot in a blue state,” meaning they were not likely to receive anything from the state capital due to their political differences. Yet, one official simply said that he knew that his county was not going to get any money and did not know why.

Some officials interviewed noted concern about perceived ambiguity about federal guidelines pertaining to allowable usage of CFR funds and a realistic time for spending the money (see Lucia 2020). Some said that there was no clear direction about what were reimbursable COVID-related expenditures beyond public safety, health, and social services. These same officials also complained that federal officials were very slow in answering questions about eligibility. Still other officials did not think that is was realistic to spend all of the CRF by December 31.

In total, the sobering conclusion we drew about revenues from these interviews is two-fold. First, it was difficult for leaders to predict when revenues would first stabilize and later return to pre-COVID levels. Second, a clear-cut consensus exists that meaningful and sustained economic recovery in the U.S. will be inextricably tied to successfully handling the health crisis created by COVID-19. Simply put, the pre-existing normal for local government revenues hinge on when the primary cause of the current recession—COVID-19—is brought under control, whether through the discovery and widespread distribution of a vaccine or a new and highly-successful regimen for treating it.

Service Reductions: To Be, or Not to Be?

How are city and county governments coping with this manifest reality and what changes should citizens expect in the near if not too distant future? This is the question that we posed to the local government official we interviewed.

As this article goes to press, we can report that most cities and counties are coping quite well, in spite of ominous signs looming on the horizon as they move into the fall months. Many of the local officials we talked to indicated, for the most part, that they are successfully handling the decline in usually reliable revenues by making a number of sensible adjustments after consulting with department heads, their budget and human resources directors, and even line personnel. To this point, these adjustments avoided or delayed the need to make significant cuts in services. In fact, several officials preferred to say that they have experienced some “slowdowns” in the provision of services. One of the more common actions taken by cities and counties is the suspension or reduction of services and/or hours of operation as part of compliance with social distancing measures recommended by the national Center for Disease Control (CDC) and mandated by a mixture of federal, state, and local emergency directives and policies. Local officials reported shutting down activities/services where people would be in close proximity to one another, including libraries and cultural centers, summer camps and youth programs, team-oriented sports fields, and enclosed facilities, tourist attractions, and community holiday celebrations (e.g., Memorial Day, July 4, Labor Day). The cost savings realized permitted local officials to shift much-needed money and personnel to other departments and programs.

Officials did not report service cuts beyond those required as part of social distancing efforts, despite follow-up questions focused on that possibility. Likewise, despite questions regarding the topic, local officials offered no definitive answers regarding services they would consider cutting if the economy showed no signs of recovery in the coming months and no second round of CARES funding emerged. Instead, a number of them provided us with insights about how they would approach service reduction decisions if it became necessary. Some projected across-the-board cuts as a solution for small deficits, what one official referred to a “cutting around the edges,” with the hope of saving as many jobs as possible. Most officials, however, leaned toward making reductions based on a priority ranking of all services with two variations on the theme emerging. One possibility envisioned the greatest reductions would be that the greatest reductions coming in “non-essential” services. A second scenario would be that high priority services like public safety (i.e., police, fire, and EMS) would be protected and thereby sustain far fewer cuts.

It is our estimation that a reluctance to name specific service reductions likely reflects more a prudence of not tipping their hand prematurely than lack of attention to such potential scenarios. As one of the officials we interviewed noted, he felt like he should “provide leadership during these tough times,” as well as serve as “a voice of optimism.” Another official stressed the importance of not unnecessarily alarming city employees about the possibility of losing their jobs that could come with service reductions.

While these city and county officials were mum about the possibility of specific service reductions, they were quick to let us know that they were proactively developing contingency plans to make cuts if they must. Most of them told us that they had already instructed their departments heads to fully involve relevant members of their units to prepare “best case” and “worse case” scenarios. One big city mayor began the forward thinking of the city’s bureaucracy in late March by charging various units with the task of crafting hypothetical budgets that were 10 percent, 20 percent, and 30 percent lower than the proposed budget for the upcoming fiscal year. Several of them also suggested that, even if the contingency plans were never needed, they can service a useful purpose—identifying areas of underutilized or wasted resources and opportunities to realize greater effectiveness of organizational programs and achieving programmatic objectives. In short, leaders saw such efforts not as exercises in futility but rather a valuable tool for critically examining government operations.

Indeed, a few officials stressed the “opportunity” presented by the recession to position their communities to attract new investments, diversity and enlarge their tax base, and improve the quality of life for residents when a recovery begins. Key areas mentioned were improving and even expanding efficient delivery of high-value services and continuing to invest in infrastructure (e.g., roadways, synchronized traffic signals, state-of-the art digital communication, quality elementary and secondary schools, as well as post-secondary education, the arts and cultural amenities, to mention a few).

Given the historic decline in economic activity and widespread expectations mentioned above of significant declines in revenue in the short and medium term, the question of how most cities and counties have so far avoided major service reductions is at first, puzzling. Our in-depth conversations spotlighted three principal factors that are protecting communities from such cuts: availability of CARES funding (i.e., CRF money), drawing on their “rainy day” reserve funds, and traditional cutback strategies.

Based on interview responses, CRS money was a “God-send” for local governments—many, we conclude, would not have been able to maintain service levels at a pre-pandemic level had it not been for the massive infusion of money (over $150 billion in CRF funds) from Washington. Local governments faced a situation in the spring and early summer that could be compared to the Great Depression of the 1930s, where they and their state lacked the financial resources to maintain the delivery of basic local services. To this point CRF money buffered local governments from having to make major decisions about service reductions because this money can be used to pay for the provision of any services that are COVID-19 (potentially including police, fire, EMS, health care, social services, housing, and even sanitation, among others). In fact, local governments can even “play the ‘fungibility’ game.” That is, they can move money in their budget that had been allocated for public safety or health-related services and use it to pay for the provision of services that are not reasonably connected to COVID-19. Yet, this much-needed “financial shot-in–the-arm” from the federal government will run out soon and the potential for more aid was rosier in August than is the case as this manuscript goes to press (Smith 2020), leaving local officials deeply troubled about potential new waves of COVID-19 infections in the fall and winter.

Dipping into one’s reserve funds has also made it possible for local government to avert serious reductions in the delivery of services. But this too is a limited “fail-safe” option, as one large city mayor noted that covering projected deficits for one budget year would empty their reserve. “Borrowing” from these funds leaves localities with no buffer to absorb the costs of future emergencies, and replenishing these funds in an economic recovery is often a lengthy process. In fact, good management practices suggest that, for every dollar “borrowed” from reserved funds, there should be a match of a dollar of money derived from cutting services and/or tax or fees increases

The third strategy used by local officials to avoid service reductions—short-run cutback practices ³ —is also not sustainable for future years. Many officials we talked to reported freezing unfilled positions, furloughing or laying off employees, delaying/canceling non-essential purchases, stopping employee travel, postponing capital improvement projects, outsourcing of various services, transferring of service responsibility to other levels of government, and co-production of services, among others. ⁴ In addition, some officials reported that they had taken advantage of the economic crisis to renegotiate employee health insurance policies, malpractice and tort liability insurance premiums, contracts for the purchase of supplies, materials, equipment, construction bids and agreements, and service contracts, among other things, with the goal of trying to save money that could be used to delay service cuts.

Our conversations with local government officials also quickly highlighted that the potential for avoiding painful service reductions varied significantly among jurisdictions. Local governments with populations under a half million people, who needed to wait on state government development of policies and procedures for passing federal CRF money on to smaller localities, had a much more trying time than those who received a direct per capita allocation of CRF money. Being at the mercy of state policy makers creates a great deal of uncertainty for them—gambling that your state government will pass on enough money in time to balance an annual budget is not a desirable situation for local government administrators. While there is some guarded optimism among local government officials with smaller populations, the uncertainty remains. As a result, many local officials reported connecting with efforts to lobby Washington for what they see as their “fair share” of CRF money in any second round of funding.

Potential Innovation: A Silver-lining in the Midst of Recession-linked Service Reductions

One of the local government officials we spoke with remarked that “a recession should never be wasted.” Even greatly difficult experiences like the COVID-19-fueled recession, he suggested, provide valuable lessons that provide both the short- and long-run benefits. At a minimum, any lessons learned could potentially assist local governments to navigate successfully through later parts of the current crisis and future ones so as to limit the possibility of future service interruptions or reductions. Furthermore, such lessons could point to ways in which the provision of services could be streamlined and achieve higher levels of efficiency and effectiveness while also saving money during times of a healthy economy. In short, the result could be a win-win for local governments as well as for their employees and citizens.

Additionally, COVID-19 is rewriting what is “normal” for local government service delivery. Faced with a need to limit interpersonal contact among employees and with the public while still providing a plethora of services, local governments (sometimes thought of as “where the rubber meets the road”) have to rethink and innovate numerous points of interface. For police officers, firefighters, emergency medical technicians, and other health care personnel, this means equipping workers with personal protective equipment (PPE) to maintain safety from virus transmission. Yet, several officials noted with pleasant surprise that innumerable local government services transitioned relatively efficiently and without erosion of quality to have employees work remotely. .

There was strong agreement among our group of local government officials that tele-working was likely to be the “wave of the future” and would revolutionize the way in which these governments do business, with probably as many as one-half of their workforces working from home. One county administrator emphatically stated that he could not imagine most of his workforce currently working remotely would ever return to their offices once COVID-19 was under control and the economy improved. A city manager estimated that around 75 percent of her city’s employees were currently working remotely and wondered aloud as to why local governments had not made this transition sooner. While our group of city and county officials were quick to point out that some kinds of jobs obviously cannot be performed remotely (police patrol officers, firefighters, sanitation workers, parks and recreational personnel, many public works employees, among others), they still identified a large segment of the local government workforce whose job responsibilities could be carried out remotely (e.g., primarily clerical or administrative in nature), assuming that employees have a needed set of personal qualities (i.e., being self-starters, highly disciplined and motivated, creative and innovative, possess high level of integrity, could work independently, needed little supervision, etc.).

Like our city manager mentioned above, our group acknowledged that local governments could have accelerated the transition to tele-working over the past several decades, especially in light of the potential benefits that could be realized. ⁵ These likely benefits (with no emphasis placed on their order) are as follows:

➢ Fewer government employees traveling to work each day would help to relieve “choked roadways,” reducing air-borne pollutants, traffic fatalities, and spending less money on construction and repair of roads

In conjunction with having more employees work remotely, local governments have seized the opportunity to rethink how they use their personnel. Historically, local government employees did everything from being a department telephone switchboard operator to providing requested information to the public to serving as collection agents for various fees, service charges, and utility bills. A number of years ago, local officials realized that using employees for these kinds of tasks was a huge waste of human resources and taxpayers’ money and could be easily taken care of with extensive use of audio recordings, carefully designed websites, and online payment services. In talking with our group of local officials, we have learned that in the last six months they have greatly stepped up the pace in utilizing these mechanisms so that they can redeploy some of their workers to perform other jobs. In fact, one of our local government officials mentioned that he has set up a committee to “brainstorm” about other kinds of ways the city could harness other technologies to allow the redeployment of personnel to more critical tasks. One idea to emerge was to have someone gather all of the daily COVID-related news items on the websites of other local governments in the county so as to have one centralized “bulletin board” for citizens to consult for vital information.

Another local government official spoke about what his city was doing to rekindle a sense of collective governance, since, in this words, “we are all in this [a pandemic and a recession] together.” To accomplish this objective, his city, early on, had embarked on a proactive plan to educate its citizens about the city’s financial picture (but particularly the decline in revenue), how COVID-19 posed an unprecedented challenge to service delivery, and what the city was doing to confront this situation, By using a multi-pronged approach (e.g., virtual citizens’ workshops and public hearings, livestreaming of council meetings, producing public affairs programs for the city’s government access channel provided by cable TV companies, open access to documents, Zoom “question and answer chat time” with various city official, etc.), they hoped to gain public understanding of tough decisions that might have to be made while keeping citizen and interest group push-back to a minimum. These anecdotes indicate it would be prudent for local government to redouble efforts to keep their citizens informed and solicit input and feedback from them, as it has the potential to provide added legitimacy for government at crucial times in the form of diffuse supports (see Easton 1965).

Relatedly, local governments during the current pandemic and recession realized the potential of workers to perform multiple tasks across many departments. Employees with a large repertoire of skills and the ability to retrain quickly can be moved around as needed in the organization. Local officials interviewed frequently noted that their city or county had increased cross-training of their staff and improved training for employees to become conversant with ever-changing technology. One county administrator succinctly summed up the imperative to take advantage of the health crisis and recession in this way: “We don’t want to miss the opportunity to improve the brain of the organization.” So far, the experience has been very positive. One county official shared that when his county had to close its libraries, they decided to redeploy many of the staff to other departments rather than laying off these personnel. With minimum retraining, these librarians were able to assist various social services-related departments in writing grant applications and administering grants that had been funded.

Furthermore, our city and county officials stressed the need to use the current situation to explore the feasibility of innovative and creative ideas and technology that could change the way in which public organizations conduct their business. As one county official stated, “…governments should be continually embracing new technology and reinventing oneself. “ A case in point is where a county experimented with case tracking in health care and found out that this method was much more efficient than the method that was previously used. One county struggling to reconcile legacy tax administration procedures with social distancing measures found that digitizing tax administration helped improved adaptability while lightening the burden on the shrinking number of county employees charged with this task. Finally, officials interviewed in two counties indicated that they have had good success with new metrics programs designed to help governments make prudent budget adjustments during the fiscal year given austere times like the present.

During normal times, complex organizations with diverse stakeholders such as local governments often approach change slowly (or avoid it altogether). One of our county administrators aptly put it this way: “During good times, governments don’t think about or imagine different ways of doing business.” Leaders often fight this organizational tendency to give too little attention to developing and implementing innovative and creative approaches that could improve and better prepare the organization for the inevitable “bumps down the road.” As noted above, our interviews show a range of leaders seeing the urgency of the current crisis as an opportunity for “thinking outside the box” as an organization and a community.

Federal-Local Relations: Some Good, Some Bad Trends

In discussing federal-local relations, most local officials interviewed noted both before and during the pandemic they generally had little to no contact with the White House, engaged in a range of initiative-specific contacts with counterparts in federal agencies, and focused their main efforts on having a strong relationship with members of their state’s Congressional delegation. These kinds of productive relationships with members of Congress are well-documented in the political science literature—several book length treatments (e.g., see Mayhew 1974; Fenno 1978; Jacobson and Kernell 1981) describe the important symbiotic relationship between members of Congress and their constituents, whether individual citizens or state and local government officials within their district. Moreover, this focus may be necessary since localities are handicapped by the legal framework of American federalism—local governments are not recognized in the U.S. Constitution as co-equal parties as are the national government and the states. Congressional offices typically provide a range of services that help individual and collective constituents navigate federal policies and bureaucracies and members can shore up local political support by bringing federal dollars in their districts or states.

Officials interviewed were clearly no strangers to such relationship building with Congress—many noting joining with officials in neighboring cities and counties to host standing meetings (monthly or every few weeks but more often during the current pandemic) to talk about general issues of relevance to all of them that are being debated in Congress or issues that are specific to their own city or county. These meetings can be held virtually, in-person when members of Congress return home, or in Washington when city or county officials make special trips there. They also meet one-on-one with their members in Congress to lobby for assistance in shepherding bills through the legislative process that directly affect them. In fact, several local officials believe that their success with these tactics are due to them having spent time working either for or with members of Congress in the past or having a personal relationship with them outside the political and governmental arena. One of our officials said he can “speed dial” directly any member of his Congressional delegation or a key staff person. Needless to say, many of our local officials mentioned that the frequency of such contacts have accelerated appreciably in the last six months or so and that their members in Congress “are totally awesome:’ and constantly “going to bat” for them on important matters.

Local officials must invest a lot of time and energy in consistent lobbying and public relations efforts to realize favorable outcomes. Local officials interviewed mentioned membership in professional associations such as NLC, NACo, and ICMA as important for leveraging the influence of their members in Congress on two fronts.

The work of sensitizing Congress to the need for a second round of CRF money to see localities through the financial dire straits they currently face with no “glimmer of hope at the end of the tunnel”

These specific positions intersected with two major gripes named by several with city and county officials focused on serving all members of their community in a professional manner.

First, some participants pointed to the extreme political polarization and resulting gridlock at the national level contributing to what they saw as unacceptable, myopic, inefficient, and ineffective efforts in handling and resolving a host of issues, including the absence of a clear, coordinated, and methodical response to COVID-19 and the recession. In exasperation, one official put it this way: “don’t count on the feds…you will be very disappointed.” Those interviewed expressed alarm about the lack of preparedness on the part of the federal government, noting that the federal government has dragged its feet in securing things such as PPE, respirators, other medical/health supplies and even downplayed the seriousness of the coronavirus. Furthermore, participants saw that Washington was initially slow to understand the severe revenues losses experienced by local governments. This has left local government officials bewildered and skeptical that the federal government will come to their rescue, as neither the Congress nor the President seem willing to compromise on an agreement for a second CARES fiscal assistance package that earmarks significant amounts of money for local governments through the CRF program.

Second, local officials are dismayed by the lack of some sense of duty or responsibility exhibited by the Trump administration, generally, and President Trump, specifically. ⁶ One of our local officials succinctly summarized the critical situation in this manner: “…this is the first time in the history of our country during a time of crisis that the President has not risen to the occasion but has just exacerbated the problems all across the country…[by] minimizing the seriousness of COVID-19.” Some local officials were not reticent to say that the President was unqualified and unfit for office, while one city manager found it appalling that the President has “zero experience in running the greatest country in the world.”

With this assessment of the kind of leadership (or lack thereof) that exists in our Nation’s capital at the moment, there appears to be an enormous need for much more long-range planning, comprehensive preparedness, knowledge-enrichment by harnessing the best minds in the medical and scientific communities, making best use of technology, and above all else, ensuring greater coordination going forward among all levels of government, with the national government taking the lead. We were greatly unprepared for the pandemic and this leaves both local and state government officials worried and frustrated. Likewise, these observations suggest that localities would benefit from any movement to “depoliticize the American federal system of government.

State-Local Relations: Mixed Bag But Strained for the Most Part

State-local relations in the U.S., even on its best day, tend to be a sore spot for both state and local officials and their citizens (see Benton 2012). This inevitably is a direct result of the legal relationship between dependent, subordinate local governments and their superior “parent” state government that gives “birth” to them. ⁷ Whereas county governments were established to be administrative arms or political subdivisions of their states and provide essentially state services at the local level, municipalities and townships were created to provide a higher level of local or urban-type services to densely populated areas beyond what the state might normally provide (public safety, utilities, parks and recreation, solid waste and sewer collection and disposal, etc.). Increasingly, however, even some county governments have had to provide some of these same services to highly urbanized parts of their unincorporated area (Benton 2002).

While some of the local government officials we interviewed were positive about their relations with their state governments, most were far from being satisfied with the current state of affairs in state-local relations. Some adjectives used to describe relations with their state government were “challenging,” “rocky,” “frustrating,” and “far from perfect.” The areas of conflict highlighted by the pandemic fell into four categories: distribution of federal aid; state responses to the pandemic limiting local authority and the potential of collaboration; frustrations with one-size-fits-all executive orders; and a lack of clear communication from the state to localities.

As mentioned earlier in this article, the distribution of CRF money to local jurisdictions with populations below 500,000 is a key area of conflict. County and city officials remain frustrated that their state governments (sometimes the governor, sometimes the legislature, and sometimes both) at the time of the interview, had failed to distribute all of the federal CRF money due to their local governments. Many of our city and county officials fear that states will eventually keep most of this money for their own use. In those cases where some of this money has been passed on to local governments, states have sometimes established their own guidelines as to how it can be spent. Local officials complain that this was not the intent of the federal government and contrary to the spirit of the legislation. Other complaints are that states are “playing political games” with CRF money, in the context of deep partisan divisions in the state that mirror the political polarization that exists in the national level. Closely akin to this belief is the speculation that states may also be using an “ideological litmus test” to decide how to disburse CRF funds. The bottom line in such scenarios is that cities and counties with Democratic leadership and liberal-leaning populations in Republican-controlled states are less likely to receive additional CRF funding than jurisdictions with Republican leadership and conservative-leaning constituents.

A second area of conflict between states and their local governments centers on a long-standing source of irritation—local governments have customarily believed that their states will never miss an opportunity to further limit their local governments’ powers and authority that they may have. As one city manager shared with us: “We are constantly tangling with the state over local control issues.” Another city manager further explained the issue by saying that “local government control is undermined at every turn…and there are efforts currently [during the pandemic] to take away emergency powers of mayors in our state.” These and similar efforts to push back against local officials are predicated on the long-outdated belief that local governments and their officials cannot be trusted to make prudent decisions or to be good stewards of the public’s money—that local governments are irresponsible children needing constant supervision by their wiser, more responsible parents (state government). This view may drive a corollary issue—what one county administrator framed as many states not expressing much interest in collaborating as equal partners with their local government but only being open to cooperation when outside events like the pandemic make it a necessity. Working within a framework that puts the accent on cooperation rather than on collaboration has the likely potential to put a chilling effect on any possibility for fruitful working arrangements between state and local officials. Speaking about the unwillingness of his state government to release CRF funds to his county, one administer lamented that they “could be doing so much more to help our citizens [with the money] like the other nine counties that received direct CARES funding.” This administrator adds that “…it really has come down to, unfortunately, a case of the ‘haves’ and the ‘have nots’ and that, both professionally and personally, is disappointing,”

A third area of conflict is the use of executive orders. The authority of governors to issue executive orders (typically they have the same force of law like statutes enacted by state legislatures) is part and parcel of the standard powers granted to state chief executives, with the understanding that the exercise of these powers should be during extraordinary or emergency situations. Given the nature of the current COVID-19 pandemic, governors mandating the wearing of face masks, school distancing, closing of businesses, schools, parks and beaches is expected. While readily recognizing the necessity of governors to issue these orders at this time, a number of our local officials, nonetheless, took issue with what they viewed as myopic efforts to draft orders with the thought that “one size fits all.” A good example of this can be seen in Texas and California with respect to the mandatory closing of many businesses and the wearing of some kind of facial covering. Recently, Texas Governor Greg Abbott issued executive orders that relaxed the requirement to wear a mask and allow many businesses (including restaurants) to reopen with few, if any, restrictions or precautions. This was strongly opposed by officials in several cities and counties (one of which was interviewed by us) with a large Latino population whose members disproportionately suffer from diabetes and would be less likely to survive a bout with the coronavirus due to being immune-compromised. In California a different scenario played out when Governor Gavin Newsom refused to rescind an earlier executive order that imposed a number of restrictions on personal behavior and forced many businesses to close in an effort to prevent or slowdown the spread of the coronavirus. This raised the ire of local officials and business owners in one county in California who believe that businesses should be allowed to reopen with few restrictions, since their coronavirus numbers are down and they continue to follow appropriate health-related protocol with safeguards still in force. These two cases clearly illustrate the main concern that local officials have with gubernatorial executive orders—they tend to place a straight-jacket on local autonomy. An appropriate remedy, according to our group of local officials, would be for the governor to permit reasonable exceptions so that local governments could develop policies that are sensitive to peculiar local circumstances

A related fourth area of contention has to do with the lack of clarity and timely advance communication by the governor to local officials with regard to executive orders and other matters. In the words of one of our local officials: “Executive orders are many times confusing and sprung on us at the last minute with little opportunity to prepare or respond to them.” Another local official said that “it is embarrassing for us to learn about the issuance of a new executive order at the same time our constituents do in a televised press conference.” These kinds of problems, according to our group of local officials, have increased during the pandemic. It is reasonable for local officials to be granted some lead time to be able to determine what they need to do to comply or to provide constructive feedback about the workability of an order. Many of our local officials pointed to this as yet another example of the shortsightedness of the state executive branch and the fact that few of the people there have ever had to “walk a mile in our shoes.”

Given these concerns relevant to the deteriorating condition of state-local relations, it would not be surprising to hear civic activists and good government groups suggest that it is time for a frank discussion about the need to expand local home rule authority. Local officials have had to listen too many times to the line that “state officials know better” when local officials) possess unique insights to their community that would argue for them taking a different and more tailored approach.

Interlocal Relations: Flourishing and a “Beacon of Encouragement”

Whereas our city and county officials had plenty to complain about with regard to their relations with Washington and their state governments, they generally could not say enough good things about their relations with other local governments. In talking to us about them in the context of the CIVID-19 pandemic and recession, they had nothing but praise, using descriptors like “fantastic,” “awesome,” “getting better every day,” “solid working relationships,” “trusting relationships have been strengthened,” and “been a time of strengthening relationships between city and county professional managers.” Local governments—in spite of the challenges they face being on the “firing line” daily, the lack of leadership, direction, and coordination from the federal government and indecisiveness, lack of clarity, and interference from their state governments—appear resilient in their efforts to provide much needed staple services to their residents as well as hope for a return to some semblance of normalcy in the not too distant future.

Having to “to go it alone,” however, is nothing new for local governments (see Benton 2018; Becker 2017; Langan and McFarland 2017; Blair and Starke 2017; Perlman 2012). These governments, but particularly cities and counties, have stood the test of time and always risen to the occasion win the face of numerous challenges from recessions to social equity rightly earning the distinction being “true first-responders” (see Gooden and Rissler 2017). Citizens who reside within the jurisdiction of a local government (oftentimes within the borders of more than one of them) understand the important role of local governments(s) in their lives. This is one reason that many Americans rank their local government(s) higher in polls than their state government or the federal government when it comes to their importance and the trust they have in them.

Local officials have always been keenly aware of the faith that their residents have in them, as well as the dependence that residents’ have on local governments to address their needs and meet their expectations. At the same time, local officials have also long understood that their state government and the federal government may not always be there to back them up and/or assist in attending to their service responsibilities. In light of this harsh reality, local governments have learned that their governments must become self-sufficient to the extent that their state constitutions and statutes allow. ⁸ In addition, knowing that they and other local governments in their state are in the same situation, they have purposively formed a bond with one another through results-oriented working relationships. ⁹ One of our local officials succinctly summarized the realities that local governments face as follows: “We are in this together and can empathize with one another while our state governments are busy taking care of their business when it is convenient or simply ignoring us…the federal government is aloof and not interested in our problems or simply wishing not to exercise leadership or responsibility about our problems and needs.”

It is important to note here that all of the local officials we conversed with were eager to let us know that there has been a significant increase in forging additional relationships with other local governments, as well as in strengthening older ones during the current pandemic and recession. As discussed below, intergovernmental relations can take many forms and play out in different scenarios ranging from formal interlocal agreements (ILA) to various types of informal agreements, understandings, a simple “firm handshake,” “a verbal commitment “to do something,” and other similar kinds of interaction among local governments

Many times, an ILA takes the form of a written contract whereby one local government formally agrees to provide a service(s) to one or more other local governments or where two or more local governments agree to co-produce a service, share facilities, equipment, personnel, or other resources when it makes sense. The ever-changing challenges posed by COVID-19 appear to be prompting neighboring local governments to enter into an ILA in new service delivery areas. For instance, several of our county officials shared with us that they had entered into formal interlocal agreements with municipalities within the county and other local governments within their metropolitan area to address the need of the growing homeless population, as well as securing congregate and non- congregate living facilities during the pandemic. In fact, one county administer mentioned that his county and several cities in his county had pooled their CRF funds to lease several vacant hotels for such purposes.

Informal agreements, understandings, and so forth are probably much more numerous. An example provided by a mayor in our group entailed his locality’s quick response to a neighboring small city request to borrow their vacuum truck (theirs was out of commission temporarily) to clear a clogged stormwater drainage pipe. Another local official referred to this kind of activity as “neighbors helping neighbors.” In talking further to our group of local officials about the kinds of relations they engage in, we got the clear sense that there has been a conspicuous uptick in several interesting—indeed, novel—kinds of informal activities over the last six months or so, with two types being noteworthy—meetings designed to share important pandemic-related information and strategies and to organize efforts to lobby their state governments and/or the federal government. As one county administrator noted, “our county, as well as many of our neighboring cities and counties are big on collaboration and coordination “

Several local officials reported frequent (weekly or daily) meetings with other local officials to talk about “successes” during COVID-19 and to leverage what they have learned to meet the individual and collective needs of their communities. Others mentioned that some meetings are designed to share information and ideas with neighboring counties and cities as well as what they have learned from contacts with state and/or federal officials. These meetings, they believe, are helping them to “stay ahead of the game” and put them in a proactive mindset rather than in reactive one which is so important considering the constantly changing environment they confront on a daily basis.

Perhaps the most impressive thing that our city and county officials shared with us are their steadfast efforts to work through a number of state affiliates of NLC, NACo, and ICMA, as well as other national organizations (e.g., U.S. Conference of Mayors) and various regional associations. While this is nothing new for local governments, local governments clearly have been stepping up the pace in efforts to utilize these forums when it is apparent that “fend-for-yourself federalism” is alive and well during the debilitating pandemic and recession and are wreaking havoc with the provision of vital services. As one of our local officials explained, “state affiliates and regional alliances can be very useful forums since they are composed of local leaders and officials who are dealing with similar problems that state and federal governments are less likely to care about and pay less attention to.” As such, these forums can become repositories or sounding boards where participants pick up ideas from fellow city and county officials with experience in matters that you are now encountering. And, it is important to understand that the people there are not governed by politics but rather by the need to get things done.

Given the current crises that engulfs local governments, much more thought should be given to how local governments can take advantage of opportunities to engage in a greater degree of coordination and collaboration with the real possibility for local governments to experience cost savings and be able to operate more efficiently and effectiveness. In fact, the reality of having to run the important business of local governments in a perpetual “fend-for-yourself” federalism environment should be enough incentive to convince local governments of moving forward with such efforts.