The pandemic is pushing US city budgets into a new age of austerity

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2020 was supposed to be the year when Philadelphia finally cleaned up its act. 

Notorious for being one of the most litter-strewn cities in America, the country’s sixth largest city planned to introduce a street sweeping program. That announcement was one of the biggest applause lines in Mayor Jim Kenney’s 5 March budget address, where he unveiled an ambitious agenda for his second term in office and framed the success of the city as an antidote to gridlock in state and federal governments.

“With the dysfunction of governance at the national level, it is clear that cities large and small must lead,” Kenney said at his budget address. “We will not be stopped by thinly disguised racist rhetoric. We will not be stopped by fake news or the lies of those who claim to be leaders. No matter where the United States is headed … Philadelphia will not be stopped.”

But the Covid-19 pandemic brought a new reality. Last week, Mayor Kenney unveiled a radically redrawn version of his budget, pared back to match the loss of revenue in a locked down city. If the city follows Kenney’s plan to cut $650 million, the city’s arts office will be eliminated and a new tuition-free aid program for low-income community college students will be scaled back. The street cleaning program will again be just a dream.

This pandemic-bred budget crisis is a microcosm of the one confronting cities across America. The federal government's numerous rounds of aid, including the $2.2 trillion CARES Act, are an attempt to stave off a depression. But these federal efforts could be offset by brutal austerity at the state and local levels.

A mid-April survey of the National League of Cities and the U.S. Conference of Mayors showed that nearly half of local leaders expected to reduce the size of the police and fire departments – something Mayor Kenney vowed not to do – while more than half expected they would cut back city services. Another April survey by the National Association of Counties found that 50 of its members had started furloughing employees, and many of the largest states have begun doing the same. Pennsylvania already stopped paying 9,000 workers.

“It's like the federal government is putting money in one pocket and state and local governments taking it out of the other pocket by either increasing taxes at the wrong time or cutting spending that is income for people like firefighters and teachers,” says Tracy Gordon, senior fellow with the Urban-Brookings Tax Policy Center.

Gordon fears the situation will only grow worse over time. She points to an estimate from the Brookings Institution which purports that each percentage point increase in unemployment leads to a $45 billion budget gap at the state level. The Upjohn Institute in Michigan estimates that each point of unemployment leads to a $22 billion budget gap at the local level. 

Those budget gaps mean states, cities and other localities will have to cut wages and jobs, leading to further declines in demand. That will reverberate throughout the economy and result in still harsher budget cutting. It’s a cycle of austerity and pain that could keep the economy mired in a depression for years. 

Philadelphia is already making some of those moves. Revenue loss is already five times greater than what the city projected after the Great Recession hit in 2009, Kenney said in a budget address posted on YouTube. To accommodate that, municipal funding will be slashed. All city workers paid above $35,000 will see pay cuts. Small tax increases have been proposed. The hours of libraries and recreation centers will be shortened. Philadelphia’s massive network of public pools will not open this summer.

“This is not what I want for our residents—and I understand if this leaves many of you angry,” Kenney said in his video.

Economists fear what’s coming is a super-sized replay of the dynamics that unfolded after the Great Recession. 

“One of the biggest drags on the recovery between 2009 and 2016 was cutbacks in state and municipal funding,” says Yakov Feygin, associate director of the Future of Capitalism Program at the Berggruen Institute. “You had increases in federal spending, but those were eaten up by austerity at the state level. It's one of the primary reasons we had such a big drag on the recovery.”

When the federal government offered stimulus to fight the Great Recession, it initially provided $150 billion in flexible relief for state and local governments with additional $80 billion in support for businesses that lost income because of public-sector cutbacks. But that money ran out by 2009, while state and local budgets continued to get hammered by lower revenues for years. It’s easier to cut spending and jobs than to raise taxes, so that led to major amounts of bloodletting in the public sector. 

In some ways, local and state governments never recovered. Only by 2018 did local governments employ almost as many people as they did in 2008, while state-level non-education jobs were still 5% below where they had been before the Great Recession. Per capita, levels of public-sector employment are back to where they were in the 1990s. Gross public sector investment is lower than it was before the last recession. 

This dynamic is especially devastating in smaller counties and cities, where the public sector often offers the best paying jobs. With those jobs cut down, GDP levels in a quarter of American counties are still lower than they were before the Great Recession.

The federal government has extended some aid to cities and states so far. The Federal Reserve intervened to stabilize municipal bond markets, which are essential to keep city services humming. 

The CARES Act included money to reimburse states and cities for direct costs of the pandemic. In Philadelphia that money covered city government purchases of medical equipment and the transformation of a basketball stadium into a field hospital. In Tucson, Arizona, it’s being used to improve the telework capabilities of the city workforce and for new accommodations for homeless residents. In Portland, Oregon, city officials want to use the money for rental assistance for those who have lost work because of the pandemic.   

But so far there’s no federal aid to account for the loss of tax revenue

Historically, the federal government mostly provides aid to states, with the expectation that they will bail out their cities. But it often doesn't work out that way – state governments are required to pass balanced budgets, and they see to their own needs first. Many states also have contentious relationships with their cities, especially where the mostly white Republican Party controls state legislatures that oversee mostly black and Latino cities. 

But local governments actually provide many of the services that citizens rely on. In many places, they pay the teachers, fill the potholes, and inspect construction sites for safety violations.

“The federal transfer should be very aggressive to cities, because that's how our system is set up – we are extremely locally governed,” said Feygin. “What I do worry about a lot is smaller cities, especially minority-majority cities, not getting the kind of support from the state budgets they need.”

Democrats in Congress are calling for $1 trillion in support for state and local government. But prominent Republican Party leaders have disdained that idea. Senate Majority Leader Mitch McConnell said states should be able to declare bankruptcy, allowing them to escape their pension obligations. President Donald Trump said the aid could only be considered in exchange for dismantling local pro-immigrant laws. Local and state aid did not appear in the last round of stimulus, despite Democratic efforts to include it. 

“It's not obvious they will do the right thing,” says Mike Konczal, director of progressive thought at the Roosevelt Institute. “Maybe political realism will kick in [so they fund local government to stave off a worse depression], but I think the ideological view of it will be stronger than the urge to have the right policy.”

That means city governments like Philadelphia, which has a legal requirement to set a new city budget by 1 July, cannot rely on getting adequate federal aid. Cuts will have to start coming hard and fast. 

For Mayor Kenney, who devoted his first four years to bolstering funding on education and municipal infrastructure, that may mean spending the next four years rolling back his previous accomplishments and forgoing the additional changes that could have shaped his legacy, including bringing back street cleaning.

The city does not yet have an estimate of how many city workers will lose their jobs. But to fill the $650 million budget hole, Kenney is only proposing $50 million in tax increases. The rest will come from cuts to city services and the municipal workforce.

“The hardest part of this budget has been having to tell people they have to be laid off,” Kenney told reporters on Friday. “It's really heartbreaking and it's very difficult. But that's the largest part of your costs, the salary and benefits for city employees.” 

No one on Friday’s conference call asked Kenney about the defunct street sweeping program, a topic that was a fixture of local media coverage and City Hall debate until March.

Jake Blumgart is a staff writer for CityMetric.


How the rise of anti-crime politics caused lasting harm to Black Americans

"I see an awareness that has developed in the Black community in the last 10 years or so about how deeply racist the criminal justice system has become," James Forman Jr. says. (David McNew/Getty Images)

The police killing of George Floyd, and the protest movement that emerged from it, has reinvigorated a national conversation around reinventing criminal justice policy in the United States.

At the same time, reports that violent crime is rising in many US cities have resurrected talk of the much-disputed “Ferguson effect,” a theory put forward by law enforcement professionals, and some researchers, who argued that police slowdowns in the wake of the first wave of Black Lives Matter protests resulted in elevated rates of violent crime. President Donald Trump is trying to weaponise this narrative, paired with images of federal officers clashing with protesters in the streets of Portland, to wage a 1968-style backlash election campaign.

“People who want to mobilise a lock-them-up style of either policing or prosecution have tried to weaponise those short-term increases,” says James Forman Jr., professor of law at Yale Law School. “Criminologists will say you have to be very, very cautious about short-term movement [in crime statistics]. We don't know whether or not what we're seeing right now [with violent crime increasing] is going to sustain itself. But the fact is, it's here and people are talking about it.”

In 2018, Forman won the Pulitzer Prize in nonfiction for his book Locking Up Our Own: Crime and Punishment in Black America. Drawing on his experience as a public defender in Washington, DC, he traced the emergence of anti-crime politics in late 20th century Black communities. Forman showed how newly empowered Black politicians fought for policies they believed would protect and uplift Black Americans, but inadvertently contributed to mass incarceration. 

CityMetric recently caught up with Forman to discuss crime trends, where he sees reason for hope in this moment and how the Black political class’s attitude toward crime and punishment has shifted since the latter part of the 20th century. 

This interview has been edited and condensed. 

There is talk right now about a resurgence of crime and violence in American cities. We saw similar, more localised concerns after the initial 2015 Black Lives Matter protests in Ferguson and Baltimore. Do you fear this could reinvigorate the kind of politics you describe in your book among segments of the Black community and political class?

I fear that it could be reinvigorated nationally and also in the Black political class. Look at the political conversations that are happening in Atlanta right now, for example, a city that also has seen a short-term uptick in crime as it is a site of a lot of protests about George Floyd and Breonna Taylor on the national level, as well as Rayshard Brooks and Ahmaud Arbery more locally in Georgia.

I think that you can already see in some of the language of the local elected officials this idea that we have to be very careful about pulling back. [They are saying] “while the protesters may make some valid points, we can't risk returning to the ‘80s and ‘90s.” Those decades really traumatised the United States, and particularly traumatised Black communities. There's a deep fear about returning to the levels of the violence that we saw in the crack years.

You write a lot about class divides among Black Americans, where middle income and elite Black people don't suffer as much from extremely punitive policies. They also have closer ties to the politicians who are creating these policies. There are very specific groups of people, even in marginalised communities, whose voices are heard.  As a result of these dynamics, you write about Black politicians fighting for things like mandatory minimum prison sentences or against decriminalising marijuana. Is there still that disconnect between those who suffer the most from criminal justice policies and those who are actually heard in political discourse?  

Let me just say a caveat, that when we talk about class divisions in the Black community it's important to hold two truths in our head at the same time. Bruce Western and others have shown the way in which class, educational status, income can dramatically reduce the likelihood of being hardest hit by the criminal system – namely incarcerated. Middle class and upper middle class Black people get some measure of protection. It's also true at the same time that Black people of all classes are worse off relative to their class counterparts in the white community. 

One area where class is least protective is policing and police stops. The police do not know how many degrees you have. They don't know how much money you have in your bank account. I want to be very clear that in making this point about class, I'm not making the argument that race or racism don't matter in this context. 

In terms of how it plays out now, I see an awareness that has developed in the Black community in the last 10 years or so about how deeply racist the criminal justice system has become. Twenty or 30 years ago they had a consciousness, but there's levels of understanding. Many of the people I write about in the book wanted to promote the interests of the Black community. They weren't motivated by indifference or callousness. When presented with mounting evidence of how awful this system has been in Black lives, they're reconsidering and recalibrating. 

Lots of former elected officials have said to me some version of “I didn't know at the time and I appreciate that you showed us in our full complexity. I appreciate that you showed the pressures we were under. If I had known then what I know now, maybe I would have been less quick to go along with some of these harsh measures.” 

The second thing that has affected the Black political class has been the emerging movements, led by Black people in particular and led by young people. They not only educated leaders, but pressured them and made them understand that there is a political cost. If you're not moved by the moral argument, then you'll be moved by the political argument. You'll be moved by the people protesting outside the office of District Attorney Jackie Lacey in Los Angeles, for example, where Black Lives Matter LA has held, I believe, a year of consecutive protests against a Black district attorney who has had really some of the worst practices.

From what I can tell, she's been pressured by the movement to change some of her positions on important issues like prosecution of low-level drug offenders, for example, and the aggressiveness with which she prosecutes police officers for acts of violence.

What do you make of the calls to defend or even abolish the police?

What I find so compelling about abolition, initially in the prison context and extended to the police as well, is that it shifts the conversation and forces us to go through experiments in which we imagine what it would take to build that world. I think that exercise is very important, because it pushes us further than we are naturally inclined to go. Cultivating a broader imagination is an incredibly important part of this work, because as you know from my book, often it was lack of imagination that caused people to fall back on [punitive policies]. 

That's what caused D.C. Councilmember David Clarke to call the police rather than public health experts when he was overwhelmed with letters about heroin addicts in public space. He was anti-drug war, but he couldn't imagine responding to a call for help with heroin addicts with anything other than police. That's a very common move from even really good and progressive people. 

People who are for defunding, for abolition, are absolutely right about reinvesting that money into alternative structures that support communities. But the reinvestment part doesn't follow naturally from the terms. We might want to come up with a term that captures the new stuff we want to do. I think that's particularly important because one of the reasons Black communities have ended up supporting more police is that Black communities have always wanted their fair share of the resources.

Then, the evidence suggests the United States has too many police officers doing prophylactic, preventative, or stop-and-frisk style policing. The style of policing that leads to district level harassment, pulling people over for no reason. But we have too little investment in the parts of police departments that investigate unsolved crimes. I'm talking about the investigator or the detective who comes to your house after there's been a robbery, an assault, a rape, or homicide. 

As compared to European countries, in the United States we actually underinvest in those parts of our police departments. Jill Leovy’s book Ghettoside shows this in dramatic detail. She describes an LAPD that's stopping and frisking Black drivers wantonly and yet the homicide detectives are still relying on a fax machine and the fax machine is broken. They have to go with their own money to Staples to buy a printer. Meanwhile, other aspects of the department are kitted out in this ridiculous riot gear that makes them look like they're in Fallujah. 

That under investment is particularly damaging to Black communities because we're disproportionately victimised by crime. Because of racism and this allocation of resources, the police are less likely to respond in Black communities. The kids I used to work with in the charter schools in DC, we talk about no snitching, but one of the reasons they would never call the police after they'd been victimised by crime is they would say, “They're not even going to come. You're wasting time.” 

I did a Q&A with Jill Leovy too and her argument is one I've struggled to articulate in our present moment. She argues the state doesn't have a monopoly on violence in low-income Black neighbourhoods, because investigations of violence are deemphasised and crime victims or their loved ones often take retribution into their own hands.  But right now, establishing or preserving the state's monopoly on violence isn't an appealing talking point. 

Yes, this is another thing nobody's talking about. Whatever we're going to do instead of the police has to be accountable to the public. The best, most direct way to have accountability is to have the individuals be public employees. As long as we have 300 million guns in this country at least some of those state employees are going to themselves be armed. It's unreasonable to ask them to do the job without it. Not as many need to be armed as are armed now, but some of them need to be. But they can't be hiding behind union contracts or civil service protections which make it impossible to remove even the worst performing, most abusive officers. 

We can not call them police if we want to. That's semantic, but maybe symbolism matters. But those people have to be state employees. They can work with community-based nonprofits, but there are also communities that don't have as robust of a nonprofit network, and they deserve protection too. These [community] groups have to be accountable to the state and, when they don't exist, the state has to be there. 

Progressives get all the points I just made when it's applied to education. The notion that things be public and accountable to the state is understood when it comes to schools. It's exactly why so many people on the left are opposed to charter schools, because they say they don't have public accountability. They want these things to be a state function. But this point about the difficulty in removing this entirely from the hands of the state is, I think, one that liberals and progressives understand from other contexts.

Jake Blumgart is a staff writer at CityMetric.