Local Governments Try to Budget Amidst COVID-19 Uncertainty

Mar 24, 2020

Local governments across Virginia are in the middle of budget season, which has now been complicated by the financial crisis gripping the global markets.

Every city council and board of supervisors in Virginia is in a fix. How are they possibly going to balance the books when they have no idea what their revenues are going to be? And the fiscal year starts in just a few weeks on July 1st.

Jennifer Victor at George Mason University says budgets will be based on a lot of guesswork.  “There’s this sort of gigantic confidence interval of uncertainty around those estimates, which if you’re a local budget planner makes it almost impossible for you to plan your future because you just don’t know what your revenue is going to be, and you assume it’s going to be low.”

James Regimbal is a financial consultant who works with the Virginia Association of Counties. He says the good news for local governments is property assessments were already locked in for this year before the economy tanked. The bad news is that a lot of other revenue sources will take a big hit.  “There’s basically the point-of-sale items. Think of that as going to restaurants, paying your sales tax and meals taxes, going to hotels, paying your sales and transit occupancy taxes. So that’s what you’ve got to estimate," Regimbal says. "What’s the reduction in retail activity?”

And then there’s the other budget season uncertainty: How to hold public hearings in the age of social distancing. Many governments are planning some kind of way for people to participate online.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.