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Blue State or Red, Pandemic Upends Public Services and Jobs

The coronavirus pandemic has inflicted an economic battering on state and local governments, shrinking tax receipts by hundreds of billions of dollars. Now devastating budget cuts loom, threatening to cripple public services and pare work forces far beyond the 1.3 million jobs lost in eight months.

Governors, mayors and county executives have pleaded for federal aid before the end of the year. Congressional Republicans have scorned such assistance, with the Senate majority leader, Mitch McConnell of Kentucky, calling it a “blue-state bailout.”

But it turns out this budget crisis is colorblind. Six of the seven states that are expected to suffer the biggest revenue declines over the next two years are red — states led by Republican governors and won by President Trump this year, according to a report from Moody’s Analytics.

Those on the front lines agree. “I don’t think it’s a red-state, blue-state issue,” said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers. The National Governors Association’s top officials — Andrew M. Cuomo of New York, a Democrat, and Asa Hutchinson of Arkansas, a Republican — issued a statement this fall saying, “This is a national problem, and it demands a bipartisan and national solution.”

Efforts to forge a new stimulus bill gained momentum this week with a $900 billion proposal — offered by a bipartisan group of legislators and endorsed by Democratic leaders — that includes $160 billion for state, local and tribal governments. While short of plugging the widening fiscal gaps, such a sum would provide welcome relief. But the Republican leadership shows no sign of coming around on state and local aid.

In reality, the degree of financial distress turns less on which party controls a statehouse or a city hall than on the number of Covid-19 cases, the kinds of businesses undergirding a state’s economy, and its tax structure.

Wyoming, Alaska and North Dakota, Republican-led states that depend on energy-related taxes, have been walloped by the sharp decline in oil prices. Places where tourism provides a large infusion of revenues, like Florida and Nevada, face revenue declines of 10 percent or more, as does Louisiana, which relies on both tourism and energy.

Elsewhere, the steep falloff in sales and income taxes — which on average account for roughly two-thirds of a state’s revenue, according to the Pew Charitable Trusts — is forcing Republican and Democratic officials to consider laying off police officers, reducing childhood vaccinations and closing libraries, parks and drug treatment centers.

Even the most optimistic assumptions about the course of the pandemic point to fiscal consequences for states and local governments that “would be the worst since the Great Depression” and take years to dig out of, Dan White, director of fiscal policy research at Moody’s Analytics, concluded.

“This is one of the things that keeps me up at night,” Mr. Fowler said, thinking about the impact on the city’s half a million residents. Such cuts could end up closing one or two police stations, even though crime is rising, he said.

Emergency response times are already slow, Mr. Fowler said, so even though he lives near a hospital, “if I have a heart attack, I’ll just crawl over there.”

From collecting garbage to issuing building permits, maintaining parks to fixing potholes, “everything’s going to slow down because we’re not going to have the people to do it,” he explained. A traffic study of a street in his district with a heavy accident toll has been delayed.

In New Orleans, Democratic city leaders are going through a similarly painful process, shrinking next fiscal year’s general fund by $92 million, down to $634 million.

To avoid layoffs, the city is cutting the pay of higher-level employees by 10 percent and requiring most other employees, including police officers, firefighters and emergency responders, to take 26 unpaid furlough days — one every two weeks — next year. The move amounts to a 10 percent pay cut, and comes on top of six furlough days imposed on the city’s roughly 4,000 employees through the end of this year.

On any given day, that will mean fewer people available to drive buses, respond to emergency calls or pick up trash.

“We are at the marrow,” said Gilbert Montaño, the city’s chief administrative officer. Every agency on average took a 21 percent cut on top of what they were already facing.

New Orleans, like most cities and localities, spends the bulk of its budget on its employees, which makes it nearly impossible to reduce spending without reducing the hours that people work.

Even so, Wyoming’s governor has said he doesn’t want to burn through the state’s safety net with years of hard times potentially lying ahead. The fund may also be needed to plug an additional $300 million deficit related to the state’s public schools. So Mr. Gordon has proposed cutting programs dealing with childhood vaccinations, substance abuse and mental health.

Meg Wiehe, deputy executive director of the Institute on Taxation and Economic Policy, said Wyoming at least was dealing with the painful reality.

“The bigger kind of cuts that will resonate with people are all going to come to a head in the early part of next year,” Ms. Wiehe said. “We’re staring down some deep and very devastating cuts.”

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