Stabilize and Transform: A Guide for City Budgets During COVID-19
By: Harvard Ash Center
Tags: Coronavirus, Crisis Management, Cities, Covid 19, Finance

↗ ️Read part one on how budgets can change in response to crisis

PHASE 2: STABILIZE

To begin stabilizing your city’s finances and your local economy, pay close attention to three realms: strategic cuts using activity-based budgeting (as described above); protecting city employees, small businesses, and underserved groups; and capital budgeting and debt refinancing. Protecting the lifeblood of the community:

Layoffs are a last resort. Don’t “cut off your arm to lose weight.”

Include the needs and voices of the most vulnerable in decision-making

Convene focus groups of small business owners and ask them what they really need.

Paycheck Protection loans only provide for employee compensation. Local businesses need more than this to reopen in a way that is safe and sustainable. Now is the time to think creatively and to strengthen your relationship with these stakeholders.

There are critical proactive steps you can take in capital budgeting.

Lobby state and federal government to help lower your cost of borrowing as a critical part of stimulus spending.

Engage with your investor community. Differentiate your bonds and sell directly to investors to reduce costs on both ends.

Begin laying the groundwork for sustainable recovery. Communicate with your Chambers of Commerce regularly.

Get together with other mayors in your state and ask state treasurers to transfer state cash from Wall Street to Main Street so you can seed investment in local communities.

Advocate at the state and local level for the next stimulus package to include money for every state to set up a state bank to lend to community banks that will invest in local businesses.

PHASE 3: TRANSFORM

Every crisis brings opportunities, and as the crisis winds down and you work to rebuild a sustainable and resilient economy, opportunities for new programs and new directions will come into view. A leaner operating budget and new partnerships to support future infrastructure projects provide a basis for transformation. Leaner operating budgets:

Departmental funds redirected to top priorities.

• Opportunities to reduce rents, increase telework and job-sharing.

• Operations reshaped in ways that advance sustainability and public health priorities. New partnerships and infrastructure:

• Small businesses and community banks more invested community partners.

• Regional partnerships become recovery engines.

This pandemic is the greatest public health crisis we have seen in our lifetimes. It is already putting you and your constituents under intense financial strain, and it may yet cause financial shockwaves worse than any you’ve previously experienced. But it is also an opportunity to reshape your city’s priorities, get rid of what you don’t need or no longer works, renegotiate or cut overpriced contracts, and scale down capital projects that no longer make sense. It may be hard to see the light now, but much good has come out of past pandemics: think indoor plumbing, public parks, and healthcare reforms. Adapting to the changes ahead won’t be easy, but don’t doubt your power to make your city a better place on the other side of this crisis.

ADDITIONAL RESOURCES