County budgets may see $144 billion hit from COVID-19

Key Takeaways

Counties nationwide could see a $144 billion hit to their budgets through the end of 2021 due to the coronavirus pandemic, according to a new report “Running on Fumes: Impact of COVID-19 on County Finances,” released by NACo.

The estimate includes anticipated increases in expenditures, lost sales tax revenue, lost revenue from charges and fees, lost business license tax revenue and lost income tax revenue. The estimate does not include potential lost revenue from property taxes or from state sales or income taxes that are shared with counties.

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Read Running On Fumes: Impact of COVID-19 on County Finances 

An additional $54 billion in property tax revenue is at risk in states where counties have not yet collected any or all property tax revenue.

Meanwhile, county budgets are being stretched to the limit, fielding 911 calls, overseeing emergency operation centers and administering human service programs for millions of newly unemployed residents.

Even before the novel coronavirus pandemic began, counties invested in community health services and hospitals – nearly $100 billion each year. Now, county budgets are being stretched thin as they work with nearly 1,000 county-supported hospitals and 1,900 local public health authorities to fight the virus.

Preliminary estimates from NACo show counties could expect a nearly $30 billion increase in expenditures, should the pandemic last through FY2021.

This would translate into the median county spending 8 percent of its resources responding to COVID-19, with some counties spending more depending on their responsibilities. NACo estimates that 76 counties could spend half of their budgets fighting coronavirus.

Furloughing employees to help stem losses is all part of the mix. Due to the rising costs of battling COVID-19 and revenue losses, many counties have had to furlough or lay off employees, on average laying off about 6 percent of the workforce, although some counties are seeing even higher numbers. Franklin County, Pa. has furloughed 25 percent of its workforce or 2,000 of about 8,000 employees.