Everybody is going broke due to the coronavirus pandemic – people, institutions, organizations. To that growing list add states and cities also in the red.
Maryland has a $1 billion shortfall for the fiscal year ending this month due to COVID-19, the disease caused by the coronavirus. New York state has a $13 billion deficit. California is facing a $54 billion shortfall. And Florida reported that state revenue fell nearly $900 million in April alone (which is one reason I don’t think Florida can spend $500 million to boost teacher pay, but it will get brownie points for “trying in a bad year”).
Orlando was in the hole by $213 million before coronavirus, according to data-z.org. To be fair, many local governments were.
The growing financial crisis is driving the panic to reopen businesses, to reopen the economy. Because the health of the people and the health of the economy are inextricably linked, states like Florida and Texas are dialing back reopening because of a frightening surge in COVID-19 cases.
Florida is in phase two of reopening, although the state never really closed and doesn’t meet requirements for reopening. In recent weeks statewide COVID-19 positive cases hit over 5,000 daily. Then, COVID-positive numbers soared past 8,000, then 9,500 daily. Even in places where stuff doesn’t happen like sleepy Seminole, the county is seeing a double-digit percentage jump in cases. All are record numbers.
States and cities are spending record amounts to combat COVID-19 even as little money is trickling in because sales tax collections have plummeted. This has led to deficit spending. Because many states, including Florida, require a balanced budget, something’s gotta give. Gov. Ron DeSantis already is warning of lots of vetos.
This is a purse-clutching moment. State universities to city governments to local police are going to feel the slash and burn. (Talk about defunding the police. COVID-19 is about to do a number on police forces nationwide.)
What gets priority: the health of the people or the health of the economy? Because the COVID-19 containment has been haphazard nationwide, the answer to the question also is haphazard with the results to match.
But folks are broke, too. The poorest of the poor – those we now know are “essential” workers but who are on the lowest economic rung – are losing their shirts, if not their lives, trying to stay afloat.
About 20 million people are out of work, although the “true” figure is estimated to be higher. Generous federal benefits, including higher unemployment checks, are set to expire next month. The funds have been a lifesaver for millions of people, without which many would have drowned.
Economists forecast that the coronavirus has widened the already broad wealth gap between race and ethnic groups, meaning black and brown people are getting poorer. According to the Institute for Policy Studies, 37 percent of black families and 33 percent of Latino families have zero or negative wealth, compared to just 15.5 percent of white families. The consequences will be long term.
How to repair that? How long can the government keep paying generous benefits? Some might argue, for as long as it takes. How do we safely keep both people and the economy healthy?
˜˜María Padilla, Editor
A version of this post was published on Facebook on June 25.