State revenues are beginning to show the strain of an economic downturn spawned by the COVID-19 pandemic. But cities also will feel the pain of lost revenues, and we urge the Legislature and Gov. Kim Reynolds to make aid to local governments a part of their response.
Cedar Rapids, in particular, will be significantly affected by an expected drop in sales tax revenues as many tax-generating businesses remain closed. The city depends on sales tax revenue both to fund its ongoing effort to build flood protection and for its Paving for Progress street repair program. A drop in fuel tax payments also would hit street work.
Hotel/motel tax collections will plunge, hitting local arts, entertainment and cultural organizations. City facilities have been forced to close, curtailing multiple revenue streams. City investments have taken a hit amid the downturn.
All communities will be affected. Coralville, for example, will lose hotel/motel dollars while all of Johnson County stands to lose revenues from sales taxes generated by Coralville’s retail hub.
Budget adjustments will be needed, but basic local government services — police on the beat, fire departments, garbage collection, municipal water, sewer and other utilities — must continue. Cedar Rapids and other communities have reserve funds, but those dollars can only be stretched so far.
As state leaders craft a budgetary response to the economic downturn, they should also direct help to local governments as they, too, struggle with the effects of pandemic shutdowns and social distancing. The U.S. House missed an opportunity this week to include aid to local governments in its fourth pandemic aid package. Congress should move swiftly to aid states, cities and counties.
Unfortunately, history is not on the side of local governments when it comes to state budget woes. Too often, Congress and legislatures have solved fiscal problems by passing the financial buck down to cities and counties. And in recent years, the Republican-controlled Statehouse in Iowa has seen fit to deprive local governments of authority on several fronts. Local control has taken a beating.
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But the fact is Iowans rely on local governments to keep them safe and provide basic services. Making sure cities can do those jobs during a pandemic should be a top state and national priority. Any legislative response to the virus and its economic side effects must reflect that reality.
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