News Updates

Impact of the pandemic on municipal revenues

Our nation and the world are experiencing an unprecedented event with the coronavirus pandemic. Illinois’ stay at home order, starting March 21, 2020, caused an immediate reduction in demand by cutting off supply of nonessential goods and services — driving down employment, sales, income, and more.

From where we are today, the timeline to normalcy, both in daily life and economic cycles, is unknown. The region does not yet know what “normal” will look like after the global pandemic. While the current economic situation is not parallel, CMAP looked at the data from the 2007-2009 recession as a comparison, and during this recession overall state revenues dropped 16 percent before they started growing again in 2011.

Currently, it is not known how long the stay-at-home order will be in place or how it will be lifted, the trajectory and duration of unemployment, and business closures. We also don’t know how the pandemic will impact the region’s tax base and revenue streams. The possibility of a strategic and slow return to opening offices and businesses confounds our ability to predict the long-term impact of an economic downturn on revenues.

It is clear that the pandemic will have an immediate impact on state, county, and municipal revenues. This policy brief will provide context and considerations as to how municipalities may be impacted by changes in revenue as a result of COVID-19 restrictions, particularly looking at sales tax, the Local Government Distributive Fund, and property tax.