Impact of COVID-19 on County Finances

Published: May 07, 2020

SLED Market AnalysisCoronavirus (COVID-19) Pandemic

NACo’s new research report studies the fiscal impact of the COVID-19 pandemic on counties and estimates an overall $144 billion budgetary hit across all U.S. counties. The report finds that major county revenue sources that support critical local services are at risk, and that counties are facing significant new expenditures as they work to protect American communities during the pandemic.

Currently, all U.S. states have declared an emergency in response to COVID-19. Additionally, there are 864 counties across the nation with an emergency declaration and 169 counties with a safer-at-home or business closure policy. County governments are facing serious revenue shortfalls and budgetary challenges resulting from the pandemic. NACo recently released report, estimates The COVID-19 pandemic has the potential to impact county budgets by over $144 billion through fiscal year 2021. This 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.

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 in FY2020.

Counties spend billions of dollars to serve residents, investing more than $638 billion in 2017. With the COVID-19 pandemic sweeping the nation, counties are seeing major drops in revenue and major increases in expenditures like health, human services, justice, education, housing and other categories that together comprise 65 percent of county expenditures. Preliminary estimates from NACo show that counties could expect a nearly $30 billion increase in expenditures, should the pandemic last through FY2021. Depending on the severity of the crisis, this estimate has the potential to be much higher. This would translate into the median county spending approximately 8 percent of its resources in response to COVID-19, with some counties spending considerably more based on roles and responsibilities. 

Counties are shifting our operations and adjusting our budgets in response to the devastation COVID-19 is wreaking on our nation. The unexpected increase in expenditures and loss in revenue has resulted in the need for counties to scale back our projects and services to focus on curbing the spread of the virus, but counties are adjusting to continue providing essential services to residents. Among many other changes, counties are transitioning employees to remote work when possible, adjusting service hours and operations and hiring additional emergency personnel. (INSERT TEXT ABOUT COVID IMPACT ON PROCUREMENT DECREASE FOR COUNTIES)

Counties are still investing during the pandemic. Focus on expenditures has been around esstential supplies such as personal protection equipment and sanitization supplies, new care centers, housing for citizen isolation, call centers for resident monitoring and support and emergency leave and overtime for staff. Since the start of the outbreak, GovWin has tracked over 600 COVID-19 related procurements coming from counties.

Here are few examples of some recent procurements put out by county governments to combat the pandemic: