Atlantic How will cities avoid bankruptcy?

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October 26, 2020

Major cities such as New Orleans, New York, and Los Angeles are already stretched thin to mitigate the COVID-19 public health catastrophe. Medical professionals continue to warn about personal protective equipment shortages, ventilator shortages, even medical workforce shortages. Large cities are redirecting financial resources to prepare for a surge of hospitalizations.

The threat of a devastating economic recession—and the memory of the 2009 financial crash—looms over smaller cities and municipalities that have started to calculate the fiscal stresses they’ll face in the coming year, my colleague Adam Harris reports:

Cities and counties are looking for ways to cut their budgets as tax revenue and economic activity decline and medical costs soar. The $3.8 trillion municipal-bond market—loans used for things like building schools, hospitals, and golf courses—has essentially frozen.

Municipalities need to balance their budgets, meaning possible cuts also to the social programs many of their residents rely on for survival. Furthermore, the gap between more well-resourced institutions and those struggling to prepare is stark. One physician told our staff writer Franklin Foer:

You know, my dad is an anesthesiologist in Virginia, in a community hospital. My father called me, a primary-care doctor, to ask me to help get him our best anesthesia protocols for putting breathing tubes in patients, and how to do that safely. And I was able to, and it was marvelous to see what our anesthesiologists at Mass General had put together, but it was concerning to me that he needed to call me, a primary-care doctor, to try to get that help. That was an alarm for me

The $2-trillion relief bill that Congress passed last week allotted hundreds of billions of dollars to help communities, but that might not be enough. Even the most affluent communities, which have a financial cushion now, may not be on as steady footing if the pandemic stretches on