Facing Enormous Budget Shortfalls Cities, States Cut Infrastructure Projects

While the United States’ budget deficit is spiraling due to the economic fall out of the coronavirus pandemic, state and local governments are facing large shortfalls in revenue, and likely will be for years.

According to a Center on Budget and Policy Priorities (CBPP) report released this month, revenue declines in the U.S. states ultimately will reach almost 10 percent of the states’ 2020 fiscal year budgets, which ended on June 30 in most states, and more than 20 percent of the states’ current fiscal year (2021) revenue projections. The CBPP said, “States are drawing on their rainy day funds and other budget reserves to address these shortfalls but, as in the last recession, those reserves will be far from adequate.”

Those shortfalls could mean long-term infrastructure investments will be on the chopping block – indeed, it appears they already are.

According to a survey earlier this summer conducted by the National League of Cities (NLC), nearly three-quarters (74 percent) of municipalities already have started making cuts and adjustments in response to the projected $360 billion revenue loss they are expected to experience over the next three years. Sixty-five percent of cities surveyed told the NCL that they have been “forced to delay or completely cancel capital expenditures and infrastructure projects, which will not only stifle job growth and slow local economic activity, but further jeopardize economic recovery efforts in communities across the nation.”

As a reminder, with the help of the U.S. Chamber of Commerce, MSCI members can make their voices heard on this important issue. By clicking here, individuals can send a letter to their U.S. senators and representatives that requests Congress work together to pass long-term funding and a federal stimulus package that will help rebuild the United States and its crumbling infrastructure.